You are likely familiar with or even used the old Home Buyer’s Plan, a federal program that allows home buyers to put funds in their Registered Retirement Savings Plan (RRSP) toward the purchase of a home without any tax implications. Of course, you are still required to repay the funds to the RRSP within a specified timeframe but in the immediate future it can be helpful way to fund the purchase of a new home.

Did you know that as of March 19, 2019, the federal government made some notable changes to the Home Buyers’ Plan?

First, the government has increased the amount that can be taken tax-free from RRSPs, from $25,000.00 to $35,000.00 for an individual (up to $70,000.00 if both buyers are first-time home buyers). This change applies to individuals regardless of their marital status.

Second, your status as a “first-time home buyer” may reset after you separate from a spouse. Under the previous version of the HBP, you would not be qualified to withdraw from your RRSP under the HBP if you previously owned or lived in a matrimonial home with the spouse from whom you have separated. Under the new HBP, you may be permitted to access your RRSP to either buy a new home or to buy out the matrimonial home from your spouse.

The Government of Canada website explains that a separated spouse is considered a first-time home buyer under the new Home Buyers’ Plan at the time of the withdrawal if:

  • at the time of the withdrawal, the individual:
    • is living separate and apart from their spouse or common-law partner because of a breakdown of their marriage or common-law partnership,
    • has been living separate and apart from their spouse or common-law partner for a period of at least 90 days, and
    • began living separate and apart from their spouse or common-law partner in the year of the withdrawal or in the four preceding calendar years; and
  • where the individual owns and occupies a home that was the individual’s principal place of residence at the time of the withdrawal, either:
    • that home is not the qualifying home that the individual intends to acquire with the funds obtained from the withdrawal, and the individual sells the home (or disposes of their interest or right in the home to their separated spouse or common-law partner) no later than the end of the second calendar year after the year of the withdrawal, or
    • the individual otherwise acquires the interest or right of their separated spouse or common-law partner in the home (e.g., where the home is the matrimonial home) no earlier than 30 days before the withdrawal and no later than September 30th of the year following the withdrawal; and
  • if the individual has a new spouse or common-law partner at the time of the withdrawal, the new spouse or common-law partner does not own and occupy a home that is the individual’s principal place of residence.

For more information about the new Home Buyers’ Plan and its eligibility requirements, visit the Government of Canada’s website here.

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