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Mailbag: RRSP First-time Buyer Exceptions

Mortgage-Mailbag Question:  I heard that I’m not considered a first-time buyer for the RRSP Home Buyers’ Plan (HBP) if me or my spouse have owned a house in the past five years. Are there any exceptions to this rule?

Answer:  Yes. You can still qualify as a first-time buyer under the Home Buyer’s Plan if…

from January 1 of the fourth previous year (i.e., 2006) until 31 days before withdrawal, you:

  • Did not own a house that you occupied as your primary residence; and,
  •  Did not make a spouse’s (or common-law partner’s) owner-occupied home your principal residence.

As this suggests, you can rent your primary residence while owning one or more rental properties, and still be considered a first-time buyer under the RRSP Home Buyers’ Plan.

Even if you or your spouse owned a principal residence in the last 4-5 years, you can still withdraw funds under the HBP if you:

  • Have a disability and are buying a home that is more accessible or better suited to your needs
  • Buy a home for a close family member with a disability, and that home is more accessible or better suited to the needs of that person
  • Give the funds to a close family member so they can buy a home that is more accessible or better suited to their needs.

Here’s the definition of a close family member and other relevant details: HBP Link.

Background on the HBP: The RRSP Home Buyers’ Plan let’s you use up to $25,000 of your RRSP savings ($50,000 for a couple) to help finance your down payment. The withdrawal is not taxed as long as you make an annual repayment of at least one-fifteenth of the amount you withdrew. The funds you use for the HBP must be in your RRSP for at least 90 days before withdrawal. Here’s a link with all the fine print.