$60,000 Canada Home Buyers Plan 2025: Understand in easy language
If you are thinking of buying a house in Canada for the first time, then there is good news for you. From April 16, 2024, the Government of Canada has made the Home Buyers’ Plan (HBP) even better. Now you can withdraw up to $60,000 tax-free from your Registered Retirement Savings Plan (RRSP), which was earlier just $35,000. You can use this money to buy or build a house, without worrying about any tax – just have to fulfill some conditions.
Whether you are a newly married couple or a single professional who wants to buy a house for themselves, this scheme can be a great help for you. Next we will give you all the information about this scheme – like who can avail this scheme, how to withdraw money, what are the rules for repayment, and which dates are important to keep in mind.
| Feature | Details |
|---|---|
| Maximum Withdrawal | Up to $60,000 per individual from RRSPs. Couples can withdraw up to $120,000 combined. |
| Repayment Period | 15 years, with repayments starting the 5th year after withdrawal (for 2022–2025 withdrawals). |
| Eligibility | First-time home buyers with a written agreement and intent to occupy the home within a year. |
| Withdrawal Process | Complete and submit Form T1036 to your RRSP provider. |
| Effective Date | Limit increased on April 16, 2024. |
| Official Website | Canada.ca HBP Page |
What is new in this plan in 2025?
Some major changes have been made to this plan in 2025, such as:
- Now you can withdraw up to $60,000, earlier this limit was $35,000.
- Those who withdraw between January 1, 2022 and December 31, 2025 will get a grace period of 5 years to repay the money. Earlier it was only 2 years.
- If both husband and wife are eligible, they can withdraw up to $120,000 together.
What is the Home Buyers Plan (HBP)?
The Home Buyers Plan is a scheme of the Government of Canada that helps those who are buying a house for the first time. Under this, you can withdraw money from your retirement fund (RRSP) without paying tax, but the condition is that you have to deposit that money back gradually in 15 years.
The purpose of this scheme is to help people buy their first home in the era of rising property prices.
How to avail $60,000 HBP 2025?
1. Check eligibility:
- You or your spouse must not have bought/lived in a home in the last 4 years.
- You must have a written agreement to buy or build a home.
- You must be a resident of Canada and plan to live in that home within a year.
2. Contribute to RRSP:
- Your funds must be deposited in an RRSP at least 90 days before withdrawal, only then they will be tax-deductible.
3. Fill out and submit Form T1036:
- This form is required for withdrawal of money under the Home Buyers Plan.
- The first part of it is filled by you and the second by your RRSP provider.
4. Use the withdrawn amount properly:
- This amount should be only for buying or building a home. Spending on any other work can exclude you from the plan.
Repayment rules and timeline
Remember, this money is a loan, not free. You will have to:
- Pay 1/15th of the amount every year for the next 15 years, starting from the 5th year of withdrawal.
- If you withdrew $60,000, you will have to pay $4,000 every year.
- If you fail to pay in any year, that amount will be added to your taxable income.
Benefits of the Home Buyers Plan
- Tax-free withdrawals (if repaid properly)
- Easily accumulate a large sum for a down payment
- No need to pay mortgage insurance if you have a 20% down payment
- Couples can withdraw a large sum together
- 5-year grace period (for 2022–2025 withdrawals)
There are some disadvantages:
- Retirement savings get reduced
- If you don’t pay in a year, it is taxable
- You may lose the benefit of earning interest on your investment
- Withdrawn funds cannot be reinvested in RRSP (only scheduled repayments can be made)
Additional financial advice
- Link the HBP to a First Home Savings Account (FHSA) – this allows you to save up to $8,000 a year tax-free.
- Check for provincial schemes as well – such as First-Time Home Buyer Incentive, Land Transfer Tax Rebate, etc.
- Consult a good mortgage broker so that you can manage your down payment better.
Frequently Asked Questions (FAQ):
Q1: Can HBP be used more than once?
Yes, but only if your previous HBP amount is repaid in full and you are eligible again.
Q2: Can I use HBP while buying a house for a disabled relative?
Yes, if you are buying a house for them, you can avail HBP benefits even if you are not buying a house for the first time.
Q3: What if I am unable to repay in a year?
The outstanding amount for that year will be added to your taxable income and tax will have to be paid on it.
Q4: Do I have to show the withdrawal in my income?
No, if you have used Form T1036 correctly then it is not required to be shown in income.
Q5: Is there any deadline for withdrawal?
Yes, withdrawal has to be done within 30 days of taking the registration of the house else it will not be valid under HBP.
