Personal Finance

Home Buyers' Plan (HBP) and repayment question

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  • May 31st, 2014 8:45 pm
[OP]
Newbie
May 29, 2004
74 posts

Home Buyers' Plan (HBP) and repayment question

I have a question about the Home Buyers' Plan (HBP) and repayment.

I withdrew $18,000 this year to purchase my first home. The HBP website states that the repayment period starts the second year following the year you made your withdrawals.

Does anyone know if I'm able to start repaying that amount this year? Being self-employed, I have zero RRSP contribution room. The only RRSP contribution room that I have would be the 18,000 I withdrew that needs to be repaid.

Thanks!
4 replies
Newbie
Aug 28, 2012
92 posts
20 upvotes
British Columbia
You can still contribute early, and for any amount. As long as you properly designate your RRSP contribution as a HBP repayment on Schedule 7 on your tax return, it shouldn't matter what your contribution room is.

Alternatively, you can increase your income on your next tax return equal to how much you want to repay. Make sure that increase is marked as a repayment to the HBP. It may be worth it if you have excess credits/deductions to cover it, or if you're getting a tax refund. It's a bit silly but if you are receiving a refund next year, you can play around with your HBP repayment until you have a balance owing of $2 and it will be waived. You may have to let CRA know about this because they might reassess you for not even having a requirement to repay the HBP.

Don't forget though that the whole point of the HBP is to lessen the tax burden that a huge RRSP withdrawal comes with.
Deal Addict
User avatar
Jan 2, 2012
4430 posts
2634 upvotes
Toronto
UNiON wrote: I have a question about the Home Buyers' Plan (HBP) and repayment.

I withdrew $18,000 this year to purchase my first home. The HBP website states that the repayment period starts the second year following the year you made your withdrawals.

Does anyone know if I'm able to start repaying that amount this year? Being self-employed, I have zero RRSP contribution room. The only RRSP contribution room that I have would be the 18,000 I withdrew that needs to be repaid.

Thanks!
You can repay the entire thing in the first year if you want. CRA is only telling you the minimum schedule you are supposed to follow (15 payments starting 2nd year).

I'm not sure I understand about you being self-employed though, you should still get RRSP room based on 18% of your reported income. Anyways repaying the HBP has absolutely nothing to do with any new RRSP room you may or may not have going forward. It is just repaying with after-tax dollars what you've borrowed for HBP. You don't get that $18K in RRSP room back.
Newbie
Aug 28, 2012
92 posts
20 upvotes
British Columbia
The RRSP contribution room increases according to your Net Income. If you don't have Net Income, your contribution room won't increase.
[OP]
Newbie
May 29, 2004
74 posts
I pay myself through my corporation in the form of dividends. My income is reported as investment income. (T5 form)


Thanks for the helpful answers!

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