Definitions for Home Buyers' Plan (HBP)

Arm's length – refers to a relationship or transaction between persons who act in their separate interests. An arm's length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

For more information see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

Common-law partner – a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. The person:

  1. has been living with you in a conjugal relationship and this current relationship has lasted at least 12 continuous months
  2. is the parent of your child by birth or adoption
  3. has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support


In this definition, “12 continuous months” includes any period you were separated for less than 90 days because of a breakdown in the relationship.

Eligible withdrawal – this is an amount you withdraw from your RRSP after you have met the HBP conditions that apply to your situation.

First-time home buyer – Unless you are a person with a disability or you are helping a related person with a disability buy or build a qualifying home, you have to be a first time home buyer to withdraw funds from your RRSP(s) to buy or build a qualifying home under the Home Buyers’ Plan.

You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.

Four-year period – The four-year period means the four years prior to a home purchase. The period begins on January 1 of the fourth year before the year you withdraw funds from your RRSP, and ends 31 days before the date you withdraw the funds. For example, if you are withdrawing the funds on July 31, 2022, the period is from January 1, 2018 to June 30, 2022.

HBP balance – your HBP balance, at any time, is the total of all eligible withdrawals you made from your RRSPs minus the total of all amounts you designated as an HBP repayment and amounts included in your income (because they were not repaid to your RRSPs, PRPP, and SPP) in previous years.

Non-arm’s length – generally refers to a relationship or transaction between persons who are related to each other. However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships or corporations, depending on the circumstances. For more information, see the definition of Arm’s length.

Participant – you are considered an HBP participant if:

Participation period – your HBP participation period starts on January 1 of the year you make an eligible withdrawal from your RRSP and ends in the year your HBP balance is zero.

Person with disability – you are considered a person with a disability if you are entitled to the disability amount. For purposes of the HBP, a person with a disability includes you or a person related to you by blood, marriage, common-law partnership or adoption. A related person with a disability does not have to reside with you in the same home.

We consider a person to be entitled to the disability amount if one of the following situations applies:

If all other eligibility requirements are met, we consider a person to be entitled to the disability amount even if costs for an attendant or for care in a nursing home were claimed as a medical expense by or on behalf of that person.

Pooled registered pension plan (PRPP) – a retirement savings plan to which you or your employer or both can contribute. Any income earned in a PRPP is usually exempt from tax as long as it remains in the plan.

Qualifying home – a qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify. For condominium units, you are considered to own the unit the day you are entitled to immediate vacant possession of it.

Related persons – are not considered to be dealing with each other at arm’s length. Related persons include individuals connected by a blood relationship, marriage, common-law partnership, or adoption (legal or in fact). A corporation and another person, or two corporations, may also be related persons.

Resident of Canada – You have to be a resident of Canada when you receive funds from your RRSPs under the HBP and up to the time you buy or build a qualifying home. For more information about residency status, see Determining your residency status or call 1-800-959-8281 (toll free within Canada and the United States), or 613-940-8495 (from outside Canada and the United States). We accept collect calls by automated response. You may hear a beep and experience a normal connection delay.

If you become a non-resident after a qualifying home is bought or built, you cannot cancel your participation in the HBP. However, special rules will apply to the repayment of your HBP balance. For more information, see The HBP participant becomes a non-resident.

RRSP deduction limit – the maximum amount you can deduct from contributions you made to your RRSP, PRPP, or SPP and to your spouse’s or common-law partner’s RRSP or SPP for a year (excluding transfers to your RRSPs or certain types of qualifying income). The calculation is based, in part, on your earned income in the previous year. Pension adjustments (PAs), past service pension adjustments (PSPAs), pension adjustment reversals (PARs), prescribed amount for connected persons, and your unused RRSP deduction room at the end of the previous year are also used to calculate the limit.

Specified pension plan (SPP) – a pension plan or similar arrangement that has been prescribed under the Income Tax Regulations as a “specified pension plan” for purposes of the Income Tax Act. Many of the rules related to RRSPs also apply to SPPs.

Spouse – a person to whom you are legally married.

Unrelated persons – may not be dealing with each other at arm’s length at a particular time. Each case depends upon its own facts. The following criteria will be considered to determine whether parties to a transaction are not dealing at arm's length:

For more information, see Income tax Folio S1–F5–C1, Related Persons and Dealing at Arm's Length.

Written agreement - a written agreement must include the date the agreement was signed, the address of the qualifying home and the closing date.

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