The final program change in the 2009 Budget for Home Owners and Home Buyers’ is the Home Buyers’ Plan (HPB). The HBP is a program which allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home for yourself or a related person with a disability.
The old maximum amount an individual can withdraw in a calendar year from their RRSP to purchase or build a qualifying home and not pay any tax on the withdrawal is $20,000.
While the new maximum amount proposed in the 2009 Budget has been made to $25,000. This is made for those who participate in the program after January 27th 2009.
Now for those who withdrew up to $20,000 from your RRSP after December 31st, 2008 and before January 28, 2009; you are entitled to withdrawing the additional funds once it does not exceed the maximum amount of $25,000.
The HPB is not connected to the new Home Buyer’s Tax Credit (HBTC) however there are some eligibility conditions for the HBP and the HTBC that are the same. If you do participate in the HPB it does not affect your eligibility for the HTBC.
There are several conditions you have to remember before you can participate in the HBP.
1. Your RRSP contributions must be in the RRSP for at least 90 days before you are able to withdraw any amounts or they are not deductible for any year.
2. You have to repay your withdrawals to your RRSP within a period of at least 15 years. You will be repaying an amount to your RRSP each year until your HBP balance reaches zero.
In order to qualify for the HBP you have to be considered a first-time home buyer. If you do not need this condition you will be unable to participate in the HBP. The exceptions to this rule only applies if you are a person with a qualifying disability or you are acquiring a home for a related person with a disability or helping someone a person with a qualifying disability acquire the home.
The HBP is a great program that is in place to help you acquire a home. There may be many requirements to be met, but if you do meet them you should consider using it to your advantage, especially since they recently increased the total amount you can withdraw within a year.
Jeff Markewich
Broker of Record with InfoMarket Group GMAC Real Estate
www.imgrealestate.ca
