Personal Finance

RRSP HBP Question

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  • Mar 6th, 2016 7:59 am
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Deal Fanatic
Jul 8, 2010
7578 posts
576 upvotes
York

RRSP HBP Question

Long story short.

Father is looking to use $25,000 from his RRSP as a down payment on a house. Once the $25,000 is used, his RRSP balance will be 0. He needs to put in $1,667 every year for 15 years to cover the $25,000 withdrawal. Say in year 1 after withdrawing the 25k, he pays back the $1,667. Can he withdraw that $1,667 later that same year, or a different year, as anyone would to use for everyday consumption from his RRSP? Or does he have to pay back the whole $25,000 before he can withdraw any money from his RRSP?

Been looking for this all day online and can't find specific info on this, TIA :) My dad thanks you!
3 replies
Deal Expert
May 30, 2005
49008 posts
10301 upvotes
Richmond Hill
Once it's repaid, it's just like a normal RRSP contribution. Don't see why it would matter if it was funds used to repay the HBP.

Those withdrawals would mean you lose the contribution room, however.
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Silver Coins and Numismatics | Heatware
Sr. Member
Mar 18, 2012
579 posts
121 upvotes
dankup wrote: Long story short.

Father is looking to use $25,000 from his RRSP as a down payment on a house. Once the $25,000 is used, his RRSP balance will be 0. He needs to put in $1,667 every year for 15 years to cover the $25,000 withdrawal. Say in year 1 after withdrawing the 25k, he pays back the $1,667. Can he withdraw that $1,667 later that same year, or a different year, as anyone would to use for everyday consumption from his RRSP? Or does he have to pay back the whole $25,000 before he can withdraw any money from his RRSP?

Been looking for this all day online and can't find specific info on this, TIA :) My dad thanks you!
He might be better of just keeping it without paying it back and withdrawing again. Any HPB that is not paid is added to income, no penalties no anything. So I don't see the benifit of repaying just to withdraw. Basically right away.
Deal Fanatic
Nov 22, 2015
7845 posts
8792 upvotes
dankup wrote: Long story short.

Father is looking to use $25,000 from his RRSP as a down payment on a house. Once the $25,000 is used, his RRSP balance will be 0. He needs to put in $1,667 every year for 15 years to cover the $25,000 withdrawal. Say in year 1 after withdrawing the 25k, he pays back the $1,667. Can he withdraw that $1,667 later that same year, or a different year, as anyone would to use for everyday consumption from his RRSP? Or does he have to pay back the whole $25,000 before he can withdraw any money from his RRSP?

Been looking for this all day online and can't find specific info on this, TIA :) My dad thanks you!
No... Makes no sense to do that. What do you mean by "everyday consumption from an RRSP"? People don't tend to withdraw from their RRSPs unless they have low/no income or retired.

Why would he recontribute in order to avoid the 1667 from being added to his income (increasing his income tax), then turn around and withdraw it with 10% withholding tax and still maybe owe more taxes when he files next year? Not to mention he's going to reduce his contribution room.

As previously mentioned, he would be better off just not repaying it at all, if the plan is to withdraw.

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