Home Buyers’ Plan Repayment: What Happens When You Miss Your 15-Year Deadline

If you withdrew money from your RRSP under the Home Buyers’ Plan (HBP) in 2011, your Home Buyers’ Plan repayment grace period is ending in 2026. This means you need to understand what happens if you miss your 15-year deadline and what your options are moving forward.

The Home Buyers’ Plan is a popular CRA program that lets first-time home buyers borrow up to $35,000 from their RRSP to buy or build a home. But here’s the catch: you must pay back every dollar you borrowed within 15 years, or the CRA will treat the unpaid amount as taxable income.

Let’s break down what you need to know about HBP repayments, what happens if you fall behind, and how to avoid costly tax surprises.

How the Home Buyers’ Plan Repayment Works

When you withdraw money from your RRSP under the HBP, you’re essentially borrowing from your own retirement savings. The CRA gives you a grace period of up to two years before you have to start making repayments.

After that grace period, you have 15 years to pay back the full amount you borrowed. Each year, you must repay at least 1/15th of the total amount you withdrew.

For example, if you withdrew $30,000 from your RRSP in 2011, your minimum annual repayment would be $2,000 ($30,000 ÷ 15 = $2,000). Your first repayment would have been due in 2013, and your final repayment would be due in 2027.

Why the 2026 Deadline Matters

If you made your HBP withdrawal in 2011, you’re approaching the end of your 15-year repayment period. The last year to make your final repayment is 2026 for the 2027 tax year.

This is a critical deadline because any unpaid balance after your 15-year period ends gets added to your taxable income. That could mean a hefty tax bill you weren’t expecting.

What Happens If You Miss Your Home Buyers’ Plan Repayment

Missing your annual HBP repayment isn’t the end of the world, but it does have immediate tax consequences. Here’s what happens:

The Unpaid Amount Becomes Taxable Income

If you don’t make your minimum annual repayment, the CRA adds the unpaid portion to your taxable income for that year. This means you’ll pay income tax on that amount at your marginal tax rate.

For example, if your minimum repayment is $2,000 but you only repay $1,000, the CRA will add the remaining $1,000 to your income. If you’re in a 30% tax bracket, that’s an extra $300 in taxes you’ll owe.

You Lose RRSP Contribution Room

One of the most painful consequences is that you permanently lose that RRSP contribution room. When you borrowed from your RRSP under the HBP, you didn’t lose your contribution room because you were expected to pay it back.

But when the CRA adds an unpaid repayment to your income, that portion is gone forever. You can’t make it up later, and it doesn’t get added back to your RRSP contribution limit.

Your Outstanding Balance Doesn’t Disappear

Just because you missed a repayment doesn’t mean your HBP balance goes away. You still owe the full amount. The only thing that changes is that the unpaid portion for that year becomes taxable income.

You’ll continue to have minimum annual repayments until the 15-year period ends or until you’ve repaid the full balance.

What Happens After the 15-Year Deadline

Once your 15-year repayment period ends, any remaining balance you haven’t repaid gets added to your taxable income all at once. This is where things can get expensive.

Let’s say you withdrew $30,000 in 2011 but only repaid $20,000 over the 15-year period. In 2027, the CRA will add the remaining $10,000 to your taxable income. Depending on your tax bracket, you could owe $3,000 to $5,000 or more in taxes on that income.

There are no extensions, no payment plans for the HBP balance itself, and no way to avoid this tax hit once the deadline passes.

How to Check Your Home Buyers’ Plan Balance

The first step to avoiding problems is knowing exactly how much you still owe. The CRA tracks your HBP balance and sends you a reminder each year on your Notice of Assessment.

You can also check your HBP balance by:

Logging into your CRA My Account: Your HBP balance is listed under the RRSP section
Calling the CRA: Their individual tax inquiries line can provide your balance over the phone
Reviewing your Notice of Assessment: Look for the section titled “Home Buyers’ Plan (HBP)” on page 2 or 3

Don’t guess or estimate your balance. Get the exact number from the CRA so you know what you’re dealing with.

Your Options If You’re Behind on Repayments

If you’ve fallen behind on your HBP repayments or realize you won’t meet the 15-year deadline, you have a few options to consider.

Make a Lump-Sum Repayment

You can repay more than the minimum amount in any given year. If you have extra cash available, making a lump-sum payment can help you catch up and reduce your outstanding balance before the deadline.

You designate your RRSP contribution as an HBP repayment on Schedule 7 of your tax return. Any amount you contribute to your RRSP can be designated as an HBP repayment instead of being used to reduce your taxable income.

Prioritize Your Final Years

If you can’t afford to repay everything right now, focus on making at least the minimum payments to avoid having amounts added to your income each year. Then, as you approach the end of your 15-year period, make larger payments to minimize the final taxable amount.

Understand the Tax Impact

If you know you won’t be able to repay the full amount, at least plan for the tax consequences. Set aside money now to cover the tax bill you’ll face when the remaining balance becomes taxable income.

This is especially important if the unpaid amount would push you into a higher tax bracket or affect your eligibility for income-tested benefits like the Canada Child Benefit or GST/HST credit.

Special Circumstances That Affect HBP Repayment

There are a few situations where your HBP repayment obligations might change.

If You Turn 71 During Your Repayment Period

You must convert your RRSP to a RRIF or annuity by December 31 of the year you turn 71. When this happens, any remaining HBP balance becomes fully taxable in that year, even if your 15-year period hasn’t ended yet.

This can create a significant tax burden if you still have a large balance when you reach 71.

If You Leave Canada

If you become a non-resident of Canada, you must still make your HBP repayments. If you don’t, the unpaid amounts will be added to your Canadian taxable income, and you may face withholding tax on those amounts.

If Your Spouse Also Used the HBP

Each person tracks and repays their own HBP withdrawal separately. If both you and your spouse withdrew money under the HBP to buy the same home, you each have your own 15-year repayment schedule.

Make sure you’re both staying on track with your individual repayments.

Why Professional Tax Help Matters for HBP Repayment

Navigating Home Buyers’ Plan repayment rules can be tricky, especially as you approach the end of your 15-year period. Many Canadians don’t realize they’ve fallen behind until they receive a larger-than-expected tax bill.

Working with a professional tax preparer helps you:

Accurately track your HBP balance: We’ll verify your balance with the CRA and make sure your repayments are being properly recorded
Plan repayment strategies: We can help you decide whether to make lump-sum payments or minimum payments based on your financial situation
Minimize tax consequences: We’ll calculate the tax impact of any unpaid amounts and help you plan to reduce your overall tax burden
Properly designate RRSP contributions: We’ll ensure your RRSP contributions are correctly designated as HBP repayments on Schedule 7
Avoid costly errors: Missing repayment deadlines or incorrectly reporting repayments can cost you thousands in unnecessary taxes

At JHG Corporate and Tax Services Inc., we’ve helped countless Canadians navigate their HBP obligations and avoid surprise tax bills. We’ll review your specific situation, explain your options in plain English, and create a plan that works for your budget and timeline.

Take Action Before It’s Too Late

If you used the Home Buyers’ Plan in 2011 or earlier, now is the time to review your repayment status. Don’t wait until tax season to discover you have a large unpaid balance that’s about to become taxable income.

Check your HBP balance today, calculate how much you still need to repay, and make a plan to meet your deadline. If you’re not sure where you stand or what to do next, professional help can save you money and stress.

The team at JHG Corporate and Tax Services Inc. is here to help you understand your Home Buyers’ Plan obligations and make smart decisions about your repayments. We’ll take the confusion out of the process and help you avoid costly tax mistakes.

Frequently asked questions

What happens if I miss my Home Buyers’ Plan repayment deadline?

If you miss your annual Home Buyers’ Plan repayment, the CRA will add the unpaid amount to your taxable income for that year. You’ll pay income tax on that amount at your marginal tax rate, and you’ll permanently lose that RRSP contribution room.

How long do I have to repay my Home Buyers’ Plan withdrawal?

You have 15 years to repay your full Home Buyers’ Plan withdrawal. You get a grace period of up to two years before repayments start, then you must repay at least 1/15th of the total amount each year until the balance is repaid or the 15-year period ends.

Can I make lump-sum Home Buyers’ Plan repayment payments?

Yes, you can repay more than the minimum amount in any given year. You simply designate your RRSP contribution as an HBP repayment on Schedule 7 of your tax return, which helps reduce your outstanding balance faster.

Where can I check my Home Buyers’ Plan balance?

You can check your HBP balance by logging into your CRA My Account, calling the CRA individual tax inquiries line, or reviewing the Home Buyers’ Plan section on your Notice of Assessment. The CRA tracks your balance and sends annual reminders.

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