The Home Buyers' Plan (HBP) allows you to withdraw funds from your RRSP to buy or build a qualifying home. Here's how it impacts your tax return:

HBP withdrawals and your taxable income

Your taxable income calculation:

Taxable Income = Income - RRSP Deduction Used + HBP Income

While HBP withdrawals don't directly increase your taxable income, they affect your RRSP deduction limit.

RRSP deduction limit impact

1. If you allocate withdrawals as HBP repayments:
   • No impact on the current year's taxable income
   • Doesn't count as an RRSP contribution
   • Maintains your RRSP deduction limit for next year
2. If you don't allocate as HBP repayments:
   • The amount gets added to your income
   • RRSP deduction fully offsets this income
   • Reduces your RRSP deduction limit for next year

What happens if I don't allocate an RRSP contribution as an HBP repayment?

If you don't allocate your RRSP contribution as an HBP repayment:

1. The HBP repayment amount is added to your taxable income
2. Your RRSP contribution is fully deducted, offsetting the added income
3. Your overall taxable income remains the same for the current year
4. Your RRSP deduction limit for the following year is reduced

While both methods result in the same taxable income, not allocating as an HBP repayment affects your future RRSP contribution room.

Verify on Schedule 7

Check Part B of Schedule 7 in the Summary Documents section to confirm how your HBP repayments are allocated.

Impact on future tax years

• HBP repayments are due over 15 years
• Missed repayments are added to your taxable income

To report HBP withdrawals in Wealthsimple Tax:

1. Add the RRSP Contributions & Deduction section to your return
2. In the Lifelong learning plan and home buyers' plan subsection, answer "Yes, my HBP" to "Does your lifelong learning plan or home buyers' plan have a balance?"
3. Enter the balance from your HBP Statement of Account
4. Enter the HBP amount to be repaid from your HBP Statement of Account
5. Enter the RRSP contribution designated as a repayment under the HBP

The section will also display the unpaid amount to be included in your income.

For help reporting Home Buyers' Plan amounts in Wealthsimple Tax please contact our support team. For personalized advice on managing your Home Buyers' Plan, consult a financial advisor or tax expert.