Can I use the Home Buyers’ Plan twice?

Q: I borrowed from my RRSP and used the Home Buyers’ Plan to buy a home 21 years ago.  I then sold the home due to divorce shortly after that. I’ve never owned a home since. Am I able to purchase RRSPs now and use the money for the Home Buyers’ Plan once again? What do I need to know?

—Danita

A: You didn’t annul your marriage, but in a weird way you sort of annulled that first home purchase, at least in the eyes of the government.

Even if you previously participated in the Home Buyers’ Plan, you may be eligible to do so again. The Canada Revenue Agency’s (CRA) David Walters says that if “your HBP balance is zero on January 1 of the year during which you plan on making another HBP withdrawal; and you meet all the other HBP conditions that apply to your situation” you may be able to use the program again. What you need to do now is to call the CRA at 1-800-959-8281 and have them review your specific case to be sure.

Because it has been over two decades, here is a reminder on the basics:  The Home Buyers’ Plan allows you to borrow from your RRSP, up to a limit, to help fund your first home. You then have 15 years to pay that amount back, accounting for it on your income tax return.

Now, it sounds like you’re going to be contributing to an RRSP and then withdrawing that money pretty quickly to buy a home. In that case, you might want to consider saving the money in a TFSA instead. You won’t get the tax deferral, but your life will be a whole lot simpler.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala.

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About Bruce Sellery

Bruce Sellery is the CEO of Credit Canada, the country’s longest-standing non-profit credit counselling agency. He is a former MoneySense columnist.