Repaying your Home Buyers Plan withdrawal

Time frame and rules for repaying House Buyers Plan

Over a period of no more than 15 years, you have to repay to your RRSPs the amounts you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew, until the full amount is repaid to your RRSPs. Your repayment period starts the second year following the year you made your withdrawals.

You will receive a Home Buyers' Plan (HBP) Statement of Account each year with your Notice of Assessment or Notice of Reassessment. This statement will show the total HBP withdrawals, the amounts you have repaid to date, your HBP balance, and the amount you have to contribute to your RRSP and designate as a repayment for the following year.

Note
Even if you declare bankruptcy, you still have to make the annual repayment to your RRSPs for each year remaining in your HBP participation period, until all amounts withdrawn under the HBP are repaid. If you do not make the repayment for a year, it will have to be included in your income for that year.

How to make your repayment

To make a repayment under the HBP, you have to make contributions to your RRSPs in the year the repayment is due or in the first 60 days of the following year. You can contribute the repayments to any of your RRSPs. Once your contribution is made, you can designate all or part of the contribution as a repayment under the HBP.

To designate your repayment, complete lines 245 and 246 of Schedule 7, RRSP Unused Contributions, Transfers, and HBP or LLP Activities, and file it with your tax return. You have to do this even if you would not otherwise have to file a return for the year.

Contributions you cannot designate - Not all contributions you make to your RRSPs in the repayment year or in the first 60 days of the following year can be designated as a repayment under the HBP. You cannot designate contributions that:

· you make to your spouse's or common-law partner's RRSPs (or that he or she makes to your RRSPs);

· are amounts you transfer directly to your RRSPs from a registered pension plan, deferred profit sharing plan, registered retirement income fund, the Saskatchewan Pension Plan, or another RRSP;

· are amounts you deducted as a recontribution of an excess qualifying withdrawal that you designated to have a past service pension adjustment approved;

· are amounts that you designate as a repayment under the Lifelong Learning Plan (LLP) for the year;

· are amounts you contribute in the first 60 days of the repayment year, that you:

o deducted on your return for the previous year, or

o designated as a repayment for the previous year under the HBP or the LLP; or

· are amounts you receive in the year, such as retiring allowances, that you transfer to your RRSPs and deduct or will deduct on your return for that year.

Note
If your RRSP deduction limit for the repayment year is zero, you can still contribute to your RRSPs and designate the amount you contributed as a repayment under the HBP. We do not consider an amount you designate as a repayment under the HBP to be an RRSP contribution. Therefore, you cannot claim a deduction for this amount on your return.

Example 6
In 2005, Robert withdrew $6,000 from his RRSPs to participate in the HBP. Robert's repayment for 2007 is $400 ($6,000 ÷ 15).

In 2007, Robert contributes $8,200 to his RRSPs. Robert could deduct the full amount as an RRSP contribution on line 208 of his 2007 return because his Notice of Assessment for 2006, shows that he has an RRSP deduction limit of $11,000 for 2007. However, he knows an HBP repayment is required.

Therefore, Robert files Schedule 7 with his 2007 return and records his $8,200 RRSP contribution on line 245. He designates $400 of this amount as an HBP repayment on line 246 of Schedule 7. Robert deducts the remaining $7,800 as an RRSP contribution on line 208 of his 2007 return.

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