People who use government programs for first-time home buyers probably won’t need them more than once in their lifetime. However, under certain circumstances, it is possible to qualify as a first-time home buyer again. This includes people who have separated from, and are no longer living with, their spouse or partner. It also includes people who purchased their first home a long time ago and would like to make use of government programs a second time.
Can you qualify as a first-time home buyer twice?
“Truly it depends on the program you are asking about,” says Denise Laframboise, a mortgage broker with LaframboiseMortgage.ca in Brooklin, Ont., about initiatives like the Home Buyers’ Plan, the First-Time Home Buyer Incentive and land transfer tax credits. “Each program will have its own criteria for [qualifying as a] ‘first-time home buyer.’ It isn’t a one-size-fits-all across every program and every provincial or municipal incentive.”
Read more on these programs, including how they define “first-time home buyers” and whether you can access their benefits more than once or for purchasing a second home.
The Home Buyers’ Plan
The Home Buyers’ Plan (HBP) is a federal program that allows first-time home buyers to withdraw up to $35,000 out of their registered retirement savings plan (RRSP) for the purpose of buying or building a home. Couples buying a place together can access up to a total of $70,000 from their RRSPs. The HBP works like a self-loan, in that borrowers must repay their RRSP gradually within 15 years. If they don’t, a portion of the funds withdrawn is taxed as income each year.
The HBP defines a first-time home buyer as someone who has not owned a home, nor occupied a home that their current spouse or common-law partner owned, within the last four years. That last part is what opens the doors of the HBP to second-time home buyers. As long as your home purchase falls outside the four-year window, you can use money from your RRSP to buy a second house without the tax implications of withdrawing.
Note that the eligibility window is longer than it seems. It begins on Jan. 1 of the fourth year prior to the withdrawal from your RRSP. So, let’s say you intend to pull money from your account on Nov. 15, 2022. In order to do so, you must not have owned a home since at least Jan. 1, 2018—that’s nearly five years.
You might be wondering about couples who have separated and are no longer living together. Previously, there were no exceptions to the four-year rule mentioned above. But under new rules introduced in 2019, a person can qualify as a first-time buyer again under the following conditions:
- You have been living separate and apart from your spouse or common-law partner for at least 90 days.
- You are not living in a home owned by a new partner or spouse at the time of withdrawing funds.
That’s not all. To use the program a second time, you must have fully repaid your previous HBP balance before Jan. 1 of the year of your next RRSP withdrawal. Depending on how much you took out, it may be tricky to repay the full amount on time.