The recent Federal Budget for 2024 has introduced significant updates to the Home Buyers’ Plan (HBP), making it easier for first-time home buyers to secure funds for their home purchase. With increased RRSP withdrawal limits and an extended repayment grace period, these changes offer greater support for Canadians looking to enter the housing market.
Understanding the Home Buyers’ Plan (HBP)
The HBP is a federal program that allows Canadians to withdraw funds from their Registered Retirement Savings Plans (RRSP) on a tax-free basis to help fund their first home purchase. Provided the withdrawn amount is repaid within a specific period, these funds remain tax-exempt, giving first-time buyers an advantage in gathering their down payment.
New RRSP Withdrawal Limits Under the 2024 HBP
Previously, individuals could withdraw up to $35,000 from their RRSPs through the HBP, while couples could combine their limits for a total of $70,000. Under the new 2024 guidelines, individual withdrawal limits have increased to $60,000, allowing couples to access up to $120,000 from their RRSPs. This change offers a substantial boost to first-time buyers, enabling them to secure higher down payments and easing the financial burden of entering the housing market.
Extended Grace Period for HBP Repayment
The new rules also extend the repayment grace period for HBP withdrawals. Previously, buyers needed to begin repaying their withdrawn funds in the second year following their withdrawal. Now, first-time home buyers who make their initial withdrawal between January 1, 2022, and December 31, 2025, will enjoy a 5-year grace period before repayments begin, offering them more breathing room as they establish their finances.
Additional Federal Programs to Support First-Time Home Buyers
Alongside the changes to the HBP, several other government programs are designed to assist Canadians with their first home purchase:
- First Home Savings Account (FHSA): A combined RRSP and TFSA for saving toward a home down payment.
- First-Time Home Buyers’ Tax Credit: A credit to help offset some of the costs of purchasing a first home.
- Land Transfer Tax Rebates: Rebates to reduce land transfer taxes for eligible first-time home buyers.
These initiatives, together with the updated HBP, offer multiple avenues for support, helping young Canadians achieve their homeownership goals.
Navigating the complexities of the housing market and understanding new government programs can be challenging. At Estate-4u, we ensure our clients are fully informed about the latest updates, enabling them to make confident, informed decisions. Contact us today to learn how we can support your real estate journey and help you make the most of the new 2024 programs for first-time home buyers.
