What Aaron Learnt Today about the Home Buyers Repayment Plan

About a year ago, some of you may know that Aaron and his wife Shauna bought their very first townhouse! Those two kids were SUPER EXCITED to get their grubby little mitts on a property which they could call their own. Of course with any shiny new toy they were unsure what they should do with it, other than just toss all their proverbial shit in and start living.

After a few months these two crazy kids began dreaming about paint colours, where to hang things on the walls, what new furniture they would like to buy and place around the home. But every time they went into a store they came out empty handed. They giggled like school children in the park.

Then one day Aaron exclaimed, “the garage is mine! I’ve a lovely plan for it!” Shauna frowned then looked at him with his big eager grin and said, “why the hell not!, you go for it Aaron!” And the wheels of motion were set in place.

Aaron’s mind EXPLODED with ideas; add a cupboard here, place a hangy thing over there for the brooms and shovels, place a bucket over here, oooh and paint the walls. Paint them with extravagant colours; bright reds, blues and oranges. Maybe a rainbow, or an ocean scene with tortoises swimming about with manta rays, or a set of beautiful mountains that drift over into a darkened city scene with tall buildings and lights on in the windows. He mastered the endless ideas on what the garage would become.

Of course, one of those objectives would be storage. Then they could remove all the items they had been storing inside their unfinished flex-room on the first floor. And the two of them could continueonward and upward with building their new home into the dreams they never knew either of them had!

One of the things they did to assist them in the purchase of their first home was use a fun program called the Home Buyers Program or HBP for short. In this HBP program you are allowed to give yourself a loan your Registered Retirement Savings Plan (RRSP) up to a maximum amount of 30% of your RRSP. Then you are provided with fifteen years to repay the money that you borrowed from yourself with a 0% interest. Together they exclaimed; What a WONDERFUL World!!

For as long as I have known Aaron, he has ALWAYS been a proactive person, when it comes to paying down debt and keeping his debt-to-income ratio in the black. The only downer in lending yourself money, would be you are taking money out of your retirement nest egg (RRSP), which will deplete the shares your account has for an unknown period of time.

The days of 2021 trickled on by and soon the 2022 tax season was upon us. Aaron began furiously stomping out to the mailbox in the hopes that the Canadian Revenue Agency (CRA) had sent the pamphlet as he wanted to get onto this repayment bus sooner rather than later.

Tax season came and went, then summer hit and Aaron found himself too busy to think about repaying himself. Then one afternoon he spotted a note in his journal, Freedom 55 is around the corner, what are your assets doing for you.

This immediately peaked the brain and he began wondering about the repayment plan again. Then tonight he phoned the CRA to find out what the plan was, how to action the plan, and when he could start making these payments.

Aaron had a twenty minute conversation with a representative of the CRA then phoned me to say two things. ‘Hey Curtis, unfortunately I cannot come watch football tonight and I called the CRA today and learnt they have me in a holding pattern for two years! That’s right a grace period for all HBP users. What a joke! I really want my money to be in my RRSP. That’s what I said to this guy. And I learnt the only time you can process the repayment is … Tax Season!”

He went on for another twelve-minutes explaining what the CRA agent had informed him. You have to wait until tax season. You need to fill out a Schedule 7. You have to mark off the amount of money you want to use to repay the loan. Most people pay themselves back in 5 to 10 years. Some do it sooner. Its really up to you since it’s a 0% loan.

I laughed then told him he’s a real class act and now a contributing member of his community and society. He laughed said enjoy the game and hung up the phone.

~ James Curtis