Home Buyers Plan -- RRSP

[ga16i]

Has anyone actually successfully made use of this and can provide some details on process and timelines?

I recently tried and came away frustrated and unsuccessful. The outcome is I did get the house in the timeframe I wanted, so no ongoing drama relating to this.

When I first talked to my mortgage specialist at my bank and asked about a withdrawal under HBP, I was told that I'd need to go in branch and talk to a teller. I'd get a form to fill out, but would need a purchase agreement saying that I'm committed to buying a certain house and I couldn't do that yet, because I hadn't even looked at the time of our first meeting.

Fast forward a few days, I find a spec home, sit down to write up a purchase agreement with salesman with a certain expiry date. A few days pass and I finally get an accepted signed copy back from the builder and the expiry date is looming. I go to a bank branch expecting to fill out a form, get the HBP thing setup and withdraw to make my down payment. I tell the teller that I'd like to make a withdrawal under HBP and she gives me this dumbass look wondering WTF I'm talking about. She types a few things and tells me that I don't have such an account... uh... what? Does it become a separate account for me to draw from? Doesn't seem to make any sense. I ask her why don't she ask someone who might be more familiar with this. 10 minutes later she comes back and tells me that I need to make an appointment with some specialist and an appointment that works with my schedule wouldn't be available until a week later well after my deadline. I really didn't want to miss this opportunity and let it slip away. I leave the branch and call the 1-800 number instead. Same story, I need to make an appointment and there are no time slots that works for me available for a week. So I tell them just make a regular withdraw and I'll eat the tax, just get me the money! They do as I say and lo and behold, money was available the next morning.

This wasn't a small credit union or anything like that. They're one of the big 3. A guide with the actual steps and timeline would've been really helpful for me, but no one person I was dealing with could/would tell me exactly what I should've expected in the HBP withdraw process. So I still don't know how that should work since I didn't end up making a HBP withdraw. In theory it sounded good, but trying to actually do it was pretty painful for me.

[Sugarphreak]

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[sabad66]

I just did it last month and it was very smooth actually.

After I had an accepted offer it went like this:
1. downloaded the T1036 form from gov't website and fill it out, print it
2. created a 'letter of intent'.. basically all the details on what i wanted, which account to draw from, which account to deposit to, which date to make the withdrawal, etc
2. walked into a branch (downtown BMO branch) and gave them both the form and letter of intent. the teller couldn't do anything himself, but he brought someone in from the back to help. he looked it over in 30 seconds, gave me his card, and said he would send it in right away
3. the day of the deposit i checked my bank account at 8am and it wasn't there, so i was a little worried. i emailed the guy and he got back to me saying everything is on track and it would be there a bit later in the day.
4. by noon or so the money was in my chequing account

for reference, here's the letter of intent i wrote up:

First Last
Address
Calgary, AB postal code

April 16, 2015

Transit 3973
First Canadian Place
100 King Street West Floor B1
Toronto, ON M5X 1H3

To whom it may concern:

This is a letter of directive for my RRSP Home Buyer’s Plan Withdrawal to accompany the attached T1036.

I would like to withdraw $xx,xxx CAD from my RRSP Investorline account, account # xxxxxxxx as part of the Home Buyer’s Plan.

Please deposit the funds into my BMO chequing account, which is account number xxxxxxx, transit number xxxxx.

I have a signed purchase agreement for a townhouse in Calgary AB and will be taking possession on <date>, 2015.

The last deposit I made to my RRSP was on Jan 20, 2015 for $xx,xxx. 90 days after this will be April 20, 2015, so please make the withdrawal on April 23, 2015 so that there is a couple days buffer after the 90 days.

If you need any further information, please call me at 403-xxx-xxxx or email me at xxxxxx

Thanks,

First Last

[sabad66]

Originally posted by Sugarphreak
Your problem is assuming the banks have authority here that goes beyond just recording/reporting the transaction to the CRA

Just withdraw it from your RSP, then when you do your taxes claim it




I plan to use some of mine for the &quot;Life Long Learning Plan&quot; which lets you take out 10K a year up to a max of 20K.

When I do it, the bank will probably tell me &quot;Oh you can't do that, you will have to pay income tax on it, bla bla bla....&quot;. To which I will reply &quot;Please STFU and just withdraw it and give me a tax receipt&quot;. Then when my taxes come around next year I will claim it there.

this will probably work, but i would imagine you will get a call from the CRA asking for more info because they don't have a copy of the T1036 from the bank to cross reference against your HBP claim. But when they do just say you sent it to the bank and that they must have messed it up and did a normal withdrawal... CRA will hopefully side with you and all will be good.

*not an expert so just my guess*

[BrknFngrs]

Originally posted by Sugarphreak
Your problem is assuming the banks have authority here that goes beyond just recording/reporting the transaction to the CRA

Just withdraw it from your RSP, then when you do your taxes claim it

You definitely don't want to go with this approach. They'll report it as a withdrawal from your RRSP instead of a HBP withdrawal and you'll create headaches for yourself when you file your return. They'll also withhold taxes on your withdrawal; putting less cash in your hands and your withdrawal will permanently burn that RRSP room (including tax).

[avishal26]

Originally posted by sabad66
I just did it last month and it was very smooth actually.

After I had an accepted offer it went like this:
1. downloaded the T1036 form from gov't website and fill it out, print it
2. created a 'letter of intent'.. basically all the details on what i wanted, which account to draw from, which account to deposit to, which date to make the withdrawal, etc
2. walked into a branch (downtown BMO branch) and gave them both the form and letter of intent. the teller couldn't do anything himself, but he brought someone in from the back to help. he looked it over in 30 seconds, gave me his card, and said he would send it in right away
3. the day of the deposit i checked my bank account at 8am and it wasn't there, so i was a little worried. i emailed the guy and he got back to me saying everything is on track and it would be there a bit later in the day.
4. by noon or so the money was in my chequing account

for reference, here's the letter of intent i wrote up:

This is almost similar to my experience... it was pretty easy - but you do need to sit with a specialist or get a teller to process the form for you. Giving the bank the HBP form when you withdraw is important because 1. they don't tax you when you withdraw 2. your tax return next year is simpler because the HBP withdrawal has already been reported to CRA.


Side note - I like the new CRA MY Account system online - I can see my remaining balance for HBP and room left in TFSA. Pretty neat.

[Sugarphreak]

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[ga16i]

Thanks everyone! The bank did withhold a % for taxes with my normal RSP withdrawal. Good to know that it's not too late and that I can still get it back come tax time. Getting the house that we wanted for a possession date that we wanted was well worth the tax amount. The timing had to be pretty much just right to coincide with a lease ending. We weren't going to jeopardize anything for a bit of tax. We're talking about a laned starter home, not some giant mansion, so the tax wasn't crazy but still a significant chunk to me.

sabad66: from the sounds of it, you didn't have to setup an appointment with some specialist and just walked in and gave the bank 1 week notice for your HBP withdrawal. I didn't know about a letter of intent until you mentioned it.

Good info! If someone had told me it'd take a week to get money out through a HBP, I would've planned accordingly by pushing the deadline for lifting conditions back.

So for a HBP withdrawal, do we all agree that you need a signed purchase agreement before making the withdrawal request? Also, do you need a possession letter with the possession date? I didn't get a possession letter until after I gave the builder my downpayment just days before lawyer stuff. So I wouldn't have had a firm possession date when I was putting my downpayment together.

[sabad66]

here is the form that you submit to your bank:
http://www.cra-arc.gc.ca/E/pbg/tf/t1036/t1036-14e.pdf

from #2 you can see that you need a completed purchase agreement before you can do this.

no need for possession letter. I didn't even have one for my townhouse (sounds like something that you get with a new build)

you can withdraw from the point you have a signed offer until up to 30 days after you take possession, so quite a big window.

[Sugarphreak]

...

[deee_wreck]

FYI the link for detailed guide has changed.

http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

Can someone comment - IF the wife owned her place before getting married , is the husband still eligible to do the HBP having not owned a property before??


The four-year period:

Begins on January 1 of the fourth year before the year you withdraw funds; and

Ends 31 days before the date you withdraw the funds.

For example, if you withdraw funds on March 31, 2015, the four-year period begins on January 1, 2011 and ends on February 28, 2015.

If you have a spouse or common-law partner, it is possible that only one of you is a first-time home buyer.

Can you participate in the HBP later?

If you are not considered a first-time buyer now, you may be considered a first-time home buyer later, once the four-year period has passed.

For example, if in 2009 you sold the home you lived in before, you may be able to participate in 2014. Or if you sold the home in 2010, you may be able to participate in 2015.

[TimLacroix]

Originally posted by deee_wreck


Can someone comment - IF the wife owned her place before getting married , is the husband still eligible to do the HBP having not owned a property before??

Technically NO, the husband is not eligible for the HBP when a marriage situation exists... and they are living in the same home (home owned by wife).

He cannot participate in the HBP.

[vkesava1]

How many withdrawals can we make for the same qualifying home ? can we make series of withdrawals from RRSP via HBP ?

I wanted to take all the money out of RRSP, but part of the amount were under the RRSP for more than 90 days, and part of it only few days.

can i make series of withdrawals ? please help

[gwill]

Why not ask your bank about specifics on this? I would think if you withdrew some for a down payment and withdrew more down the road for lawyer closing costs then it would be okay. They don't stipulate what the funds must be spent on as long as its spent on your house.

Where you might run into an issue is if you close on the home immediately and your just withdrawing for no reason....

[vkesava1]

called the bank. Every person is saying something different. One person says you can make multiple withdrawals and one person says only one withdrawal . not sure which one is true

[ga16i]

Originally posted by vkesava1
called the bank. Every person is saying something different. One person says you can make multiple withdrawals and one person says only one withdrawal . not sure which one is true

^ This! I'd say your best bet would be to make an appointment at the bank with someone that will process the HBP request for you and ask them then. I really don't believe anyone else in the building besides them will have anything close to the real answer.

EDIT: I realize that you won't have a signed purchase agreement right now and just have questions, but I've been very unlucky with getting someone who actually knows about how HBP works at the bank. Better to just show up to the appointment with this "specialist", play dumb and ask for clarification.

[Disoblige]

Originally posted by vkesava1
called the bank. Every person is saying something different. One person says you can make multiple withdrawals and one person says only one withdrawal . not sure which one is true

You can do multiple withdrawals for the HBP for that particular house purchase as long as its been in your account for 90 days. This makes sense because you could have more than 1 RRSP account. You just add 2 the RRSP slips later that the bank gives you when you do your taxes for HBP.

[TimLacroix]

Originally posted by vkesava1
called the bank. Every person is saying something different. One person says you can make multiple withdrawals and one person says only one withdrawal . not sure which one is true

Yes you can make multiple withdrawals.

http://www.cra-arc.gc.ca/tx/ndvdls/t...hdrwl-eng.html

[cdnsir]

BUMP.

Anyone has experiences in taking on a Home Buyers's plan for the second home?

I'm in a typical situation where my starter home that I maxed out the $20k HBP for has been outgrown. The rule says we may be qualified for HBP again after 4 years of ownership, that condition is met because that was almost 7 years ago now.

What I don't get is the repayment part, do we need to pay off the first one fully first before starting a second? Or can both be held in parallel because they are different houses under different HBP withdrawals?

[Disoblige]

Originally posted by cdnsir

What I don't get is the repayment part, do we need to pay off the first one fully first before starting a second? Or can both be held in parallel because they are different houses under different HBP withdrawals?

CRA allows you to participate in the program again if your HBP balance is at $0, and you have completely repaid the borrowed RRSP amount.

Edit: See Tim's response next page for clarity/more info.