The Home Buyers’ Plan for Canadians allows first time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) in order to buy or build a home. Up to $25,000 can be withdrawn for your primary residence or for a related person with a disability. Your contributions must have been in your RRSP for a period of no less than 90 days to qualify. Generally, you will have to repay the amount withdrawn within 15 years.
The Economic Action Plan also introduced the First Time Home Buyers’ Tax Credit to assist you in realizing your dream of home ownership. The costs associated with purchasing a home (such as legal fees, disbursements and land transfer taxes) can be a particular burden for first time home buyers who must not only pay these costs but save for a down payment as well. To assist with these costs, the Government of Canada introduced a FTHB Tax Credit in 2009 – a $5,000 non-refundable income tax credit amount on a qualifying home. For an eligible individual, the credit will provide up to $750 in federal tax relief.