The ABC’s of the HBP.
Test your knowledge of the Canadian government’s HBP program (Home Buyers’ Plan):
1. I own my main residence and I would like to buy another property. Can I use the HBP? No.
2. I own my main residence and my new girlfriend has been living with me for a year. Can he benefit from the HBP if we decide to buy a new property?
Theoretically no, but if you separate for more than three months (different address), the spouse who is not yet a property owner can access the program.
3. I am the owner of two rental properties but don’t live there. Can I access the HBP program if I buy a property where I will live?
4. What is the latest date to contribute to an RRSP in 2017 in order for the contribution to qualify for 2016 income tax purposes?
March 1, 2017.
5. I have RRSP contributions in the FTQ Fonds de solidarité. Can I withdraw them in the HBP program?
Yes, but you have to prove that these RRSP investments are the last ones to be withdrawn and that you do not have any other RRSP investments elsewhere.
6. I am buying a mobile home on rented land. Can I access the HBP program?
7. I have $30,000 in RRSP contributions. Can I withdraw the whole amount in the HBP program?
No, the maximum withdrawal allowed in the HBP program is $25,000.
8. My federal notice of assessment indicates that I can contribute $7,000 to my RRSP, but can I invest $8,500 penalty-free?
Yes, a contribution that exceeds the amount by $2,000 is allowed, but the deduction for the surplus amount will apply to the following year only.
9. How much can a person withdraw from their RRSP in the HBP program without an income tax penalty?
10. Can I use my income tax refund with an RRSP loan in the HBP program as the sole down payment on the property I wish to buy?
Yes, but the client must qualify for the Multi-Source program and pay the extra premium of this program on the CMHC insurance.
11. I have $10,000 invested in an RRSP and I want to use this as a down payment on the purchase of my home. I signed a purchase offer with my real estate agent on December 1, 2015. I will sign the act of sale at the notary on April 1, 2016. On December 22, 2015, I withdrew $2,000 and on February 20, 2016 I will withdraw the remainder of my RRSP, $8,000. Can both these withdrawals be considered in the HBP program?
Only the first withdrawal will be considered admissible for the HBP, the $8,000 second one will be taxed. Why? Only withdrawals made in the same calendar year are admissible in the HBP program.
12. I am receiving permanent benefits from the CSST, so would it be worthwhile for me to take advantage of an RRSP loan under the HBP program?
No, because income from the CSST is not taxable, so it is impossible to obtain an income tax refund since no income tax is paid.
13. I earn $22,000 a year and I have two children under my responsibility. Would it be advantageous to contract an RRSP loan in order to receive a substantial tax refund?
No. With two children under your responsibility, the income tax paid previously will be refunded almost entirely at the end of the year so there wouldn’t be any more income tax on to save from paying.
14. I’m buying a new property. Can I access the HBP program?
15. I live in Canada. Can I purchase a property in the United States and use the HBP program for my down payment?
No. The property has to be located in Canada.
16. I don’t intend to live in the property I’m getting ready to purchase. Can I access the HBP program?
No, you have to live in the property you want to purchase to be admissible in the HBP program.
17. I’m currently renting. Can I purchase the building where I live using my RRSP?
18. I am withdrawing my RRSP contributions under the HBP program to purchase my first main residence. Am I obliged to use this money for the down payment?
No, the money withdrawn from an RRSP can be used at one’s discretion.
19. I obtained an RRSP loan on February 1st. What is the earliest date I can sign at the notary?
Sixty days after the purchase date, i.e. April 2nd, .
20. After having signed at the notary, what is the deadline for withdrawing my RRSP in the HBP program?
Thirty days after signing the act of sale.
21. I am withdrawing my RRSP in the HBP program. What is the latest date to sign at the notary?
The 1st of October of the following year.
22. Can I postpone my RRSP deductions for later years?
Yes, you have to fill out Annex 7.
23.What is the annual repayment to my RRSP if I made a withdrawal for use in the HBP program?
One fifteenth (1/15) of the withdrawal is the minimum amount to be reimbursed annually.Your first repayment starts the second year after the year you withdrew funds from your RRSPs for the HBP.
24. If I sell my property do I have to repay my RRSP faster?
25. I used the HBP program to buy my property 5 years ago and I am no longer the owner nor have I owned my family residence for 5 years. Can I buy a main residence and access the HBP program a second time?
Yes, but the total amount of the first RRSP withdrawal has to be repaid before January 1st of the year the second HBP program will be used.
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