iAtoday

In response to the current housing crisis and rising rent and house prices, the 2024 federal budget tabled on April 16 proposes changes to the HBP. Here are the changes:

Increased withdrawal limit: It will now be possible to withdraw up to $60,000 from RRSPs (Registered Retirement Savings Plan), instead of $35,000, for the purchase of a first home. This means couples will be able to withdraw a total of $120,000.

Extended repayment grace period: The repayment period for HBP withdrawals currently begins in the second year after the first withdrawal. The budget proposes to temporarily extend this period from two to five years. As a result, anyone making a first withdrawal between January 1, 2022 and December 31, 2025 would have five years before beginning to repay their withdrawals. The repayment period remains unchanged at 15 years. This change is not yet effective, and we don’t know when it will take effect. We will keep you informed as the situation evolves.

Example: Calculation of annual minimum required repayment – first withdrawal between January 1, 2022 and December 31, 2025 (when the proposed temporary extension of the repayment grace period takes effect)

In 2022, Paul withdrew $30,000 from his RRSP under the HBP. His minimum required repayment starting in 2027 would therefore be $2,000 ($30,000 ÷ 15).

Paul would make repayments of $2,000 for 2027, 2028, and 2029.

In 2030, if he contributes $8,000 to his RRSP and designates this amount as his HBP repayment for 2030, the amount he would have to repay for the year 2031 could be calculated as follows:

  Source: CRA

For more information about these changes, please refer to the CRA website.

An article will be published in My Client Space to inform group retirement savings plan members of these changes.