Home Buyers’ Plan (HBP) Repayments in 2026: What Happens If You Don’t Repay?

Income Tax Act s.146.01 | CRA Guide RC4135

You withdrew from your RRSP under the Home Buyers’ Plan.

You bought the home.

Then life moved on.

But each year, a question appears on your tax return:

“Did you make your HBP repayment?”

If you do not understand how the repayment rules work, the consequence is simple:

The unpaid amount becomes taxable income.

Let us examine the rules clearly.

 

First Principle: The HBP Is a Deferral — Not a Tax-Free Withdrawal

Under ITA s.146.01, the Home Buyers’ Plan allows eligible individuals to withdraw funds from their RRSP to purchase or build a qualifying home.

The withdrawal is:

• Not taxable at the time of withdrawal
• But subject to mandatory repayment over time

It is effectively an interest-free loan from your RRSP.

 

How Much Can You Withdraw?

As of recent updates:

• Eligible individuals may withdraw up to $35,000 (subject to CRA limits in force at the time of withdrawal).

If both spouses participate, the total may be doubled.

But the key issue is not the withdrawal.

It is the repayment.

 

When Do Repayments Start?

Repayment generally begins:

The second year after the year of withdrawal.

Example:

• Withdraw in 2024
• First repayment required in 2026

CRA will track your required annual minimum repayment.

 

How Much Must Be Repaid Each Year?

The repayment period is generally:

15 years

Each year:

• You must repay 1/15 of the total withdrawal
• The required amount appears on your Notice of Assessment

You may repay more than the minimum.

But you must designate the repayment correctly on your return.

 

How Repayment Works

You contribute to your RRSP as usual.

When filing your return:

• You designate part (or all) of the contribution as an HBP repayment.

Only the designated amount reduces your outstanding HBP balance.

If you forget to designate:

CRA treats the contribution as a regular RRSP deduction — not as an HBP repayment.

This is a common error.

 

What Happens If You Do Not Repay?

If you fail to repay the minimum required amount:

The shortfall is included in your income for that year.

This means:

• It becomes fully taxable
• It does not create new RRSP room
• It permanently reduces your RRSP

You cannot reverse it later.

 

Example Scenario

You withdrew $30,000.

Annual repayment required: $2,000.

You contribute $2,000 to your RRSP but forget to designate it as HBP repayment.

CRA treats it as a normal RRSP deduction.

HBP shortfall: $2,000.

That $2,000 is added to your income and taxed at your marginal rate.

Proper designation matters.

 

What If You Sell the Home?

Selling the home does not automatically trigger full repayment.

The repayment schedule continues.

However, if you:

• Become a non-resident
• Die
• Cease to qualify

Special rules may accelerate inclusion.

Each case requires analysis.

 

HBP and Family-Owned Enterprise Planning

Owner-managers often:

• Prioritize corporate dividends over personal RRSP contributions
• Focus on IPP or corporate investments

Failure to maintain HBP repayments may create unexpected personal income.

Annual review is necessary.

 

Interaction With Other Retirement Planning

HBP repayments reduce:

• Available RRSP deduction room (to the extent you designate repayment)

If you fail to repay:

• You lose the RRSP shelter permanently.

HBP must be coordinated with:

• RRSP strategy
• IPP planning
• Cash flow needs
• Dividend planning

 

Common Misunderstandings

“If I don’t repay, nothing happens.”
The unpaid amount becomes taxable income.

“My RRSP contribution automatically counts.”
You must designate it as an HBP repayment.

“Selling the home cancels repayment.”
Repayment schedule generally continues.

“CRA won’t track it.”
CRA tracks HBP balances annually.

 

Strategic Considerations for 2026

Each year:

• Confirm required repayment amount
• Confirm RRSP contribution designation
• Review cash flow planning
• Integrate with broader retirement strategy

Failure to manage HBP is not catastrophic — but it is inefficient.

 

Final Thoughts

The Home Buyers’ Plan under ITA s.146.01 allows tax-deferred access to RRSP funds — but it is not free money.

Repayment is mandatory over 15 years.

Failure to repay results in income inclusion.

For disciplined families and entrepreneurial professionals, annual compliance review prevents unnecessary tax leakage.

At Shajani CPA, we integrate RRSP planning, corporate compensation strategy, and home ownership decisions with statutory clarity.

Because even small tax inefficiencies compound over time.

Tell us your ambitions, and we will guide you there.

 

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2026 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.