First-Time Home Buyer Plan
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First-Time Home Buyer Plan
We dedicate extra care and attention to First-Time buyers while walking them through the process. We try our best to be resourceful, and your lawyer will also be available to explain all the credits and perks that come with being a First-Time home buyer.
What is a first time home buyer plan?
The First Time Home Buyer Plan (FTHB) is a program designed to help first-time homebuyers Purchase a home by allowing them to withdraw up to $25,000 from their Registered Retirement Savings Plans (RRSPs) tax-free to use as a down payment on a home.
You must be a first-time homebuyer, which means that you have not owned a home in the past five years.
You must be a resident of Canada and at least 18 years old.
You must have a written agreement to buy or build a qualifying home.
You must intend to occupy the home as your principal place of residence within one year of purchasing it.
If you meet these criteria, you can withdraw up to $25,000 from your RRSPs tax-free to use towards the down payment on your home. You have up to 15 years to repay the withdrawn amount back into your RRSPs, or you may choose to repay it in one lump sum.
The FTHB plan can be a useful tool for first-time homebuyers who may not have the savings or credit necessary to make a large down payment on a home. However, it is important to keep in mind that withdrawing funds from your RRSPs can impact your retirement savings, so it is important to carefully consider whether this option is right for you.
To participate in the First Time Home Buyer Plan (FTHB), you will need to complete the following steps:
1. RRSP Account
Open a special type of RRSP account called a "Home Buyers' Plan (HBP) account" at a financial institution.
2. Eligible RRSP Funds
Deposit your eligible RRSP funds into your HBP account. You can do this by making a contribution to your RRSP and then transferring the funds to your HBP account, or by transferring funds directly from your existing RRSP to your HBP account.
3. Written Agreement
Obtain a written agreement to buy or build a qualifying home. This could be a purchase agreement, a written agreement to build a home, or a combination of both.
Withdraw up to $25,000 from your HBP account to use towards the down payment on your home. You can do this by filling out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP.
Repay the withdrawn amount back into your RRSPs over a period of 15 years, beginning in the second calendar year following the year in which you made the withdrawal. Alternatively, you can choose to repay the amount in one lump sum.
It is important to note that the FTHB plan is not a loan, and you do not have to pay interest on the withdrawn amount. However, you will be required to repay the withdrawn amount back into your RRSPs over time, or you may face tax consequences.
If you are unable to repay the amount you withdrew under the FTHB plan, you will have to include it in your income for the year in which you defaulted on the repayment. This may result in you owing tax on the amount.
Overall, the First Time Home Buyer Plan can be a useful tool for first-time homebuyers looking to purchase a home, but it is important to carefully consider whether it is the right option for you and to understand the potential tax implications.