Federal Government Extended the RRSP Home Buyers Plan

The recently announced federal budget has introduced modifications to the Home Buyers Plan which allows more flexible use of registered savings - including the purchases of homes built for those with disabilities.

Over the past six years, nearly half a million Canadians have used their Registered Retirement Savings Plan (RRSP) savings for a downpayment to purchase a home using the Home Buyers Plan. Under the modified plan, starting in 1999, homeowners can use the plan to purchase a more accessible home or a home for a dependent relative. In addition, a person who has already used the plan and who has fully repaid the RRSP will be eligible to use the plan for a second time. Buyers can cash out up to $20,000 from their RRSPs to use for a downpayment on a home. Couples are allowed to draw out a maximum of $40,000, and there will be no penalty for such withdrawal, provided the money is repaid over a set time period.

According to the federal government, the budget change to allow the secondary purchase of a home for a dependent relative is a reaction to demographics. At present, one in nine Canadians is over the age of 65 and by the year 2030 this will rise to one in four. The aging population has accelerated the need for more accessible homes, i.e. homes that are equipped for persons with disabilities. It is estimated that some 50,000 homes will have to be built or retro-fitted each year to keep pace with demand for accessible features.