The Repayment That Starts Five Years After You Forget About It

Taking money out of your RRSP to buy a first home does not feel like borrowing. It is your money, in your account, for your house. Nobody sends you a loan agreement.

But it is a loan, from you to you, with a fifteen-year repayment schedule and a tax bill attached to every year you forget. And the first payment is not due for years — which is precisely the problem.

How long do you have to repay it?

Fifteen years, into a registered plan. The Canada Revenue Agency's wording is that "You have up to 15 years to repay to your registered retirement savings plan (RRSP), pooled registered pension plan (PRPP) or specified pension plan (SPP)."

So the money has to go back where it came from, or somewhere equivalent. This is not a debt to a bank that can be refinanced or ignored; it is an obligation that exists inside the tax system.

When does the clock actually start?

Not the year you withdrew, and — this is the part that catches people — not on the same schedule for everyone. It depends on when you made your first withdrawal.

CRA states two different rules. For withdrawals before 1 January 2022: "your repayment period started the second year after the year you made your first withdrawal."

For a first withdrawal between 1 January 2022 and 31 December 2025: "the 15-year repayment period would start the fifth year following the year in which a first withdrawal was made."

Read those together and the consequence is stark. Two people who bought first homes a couple of years apart can have repayment clocks beginning in different years under different rules. There is no single "your HBP starts now" date you can pick up from a friend's experience.

And five years is a long time. Someone who withdrew, moved in, painted the spare room and got on with their life has a first repayment falling due half a decade later, for a transaction they stopped thinking of as unfinished.

If your first withdrawal is more recent than those two windows, check which rule applies to your year rather than assuming — this is exactly the sort of provision that gets amended, and your CRA account is the authority on your balance and start year.

What is the minimum each year?

Your outstanding balance divided by the years you have left. CRA's instruction is to "divide your HBP balance by the number of years remaining in your repayment period."

That structure has a quiet implication worth noticing: the minimum is not fixed. Repay only the minimum and the annual figure stays roughly level; repay less than the minimum in some year and the remaining balance is spread over fewer years, so every subsequent minimum goes up.

Falling behind does not just defer the problem. It raises the recurring cost of it.

What happens if you miss a year?

The shortfall becomes taxable income. Not a penalty, not interest — income, taxed at your marginal rate.

CRA is precise: "If you repay less than the required minimum annual repayment for a particular year, you have to include the difference between your designated HBP repayments for the year and the minimum required repayment for that year as RRSP income on line 12900 of your income tax and benefit return."

The difference. So a partial repayment is partially forgiven; only the gap is taxed. That is more forgiving than a flat penalty, and it also makes the failure almost invisible — there is no letter announcing a default, just a slightly larger tax bill in a year when you were not expecting one.

It is also permanent in a specific way: money taxed this way has left your RRSP for good. You have converted retirement savings into a taxable event, by omission.

Which reminders are worth setting?

Three, and the first is the only one that reliably works:

• The day you make the withdrawal, set a one-off reminder for your repayment start year. Work out which rule applies, write the year down, and put the reminder in that year — not a vague intention to "sort it later". This is a deadline five years out; nothing else in your life will surface it.
• Then a recurring annual reminder, set for early February. You have until the RRSP contribution deadline in early March to make a designated repayment for the year, so a February prompt leaves room to move money. Put "designate as HBP repayment" in the reminder text, because an ordinary contribution is not automatically treated as a repayment — you have to designate it.
• One in the autumn of any year money is tight, to check the balance and the minimum. If you already know you will fall short, knowing in October beats discovering it at tax time, and the amount you do manage reduces what gets taxed.

In ReminderIt you can set these by message — "remind me every year on 5 February to make my HBP repayment" — and it reads the date back before saving. The start-year one is a one-off with a real year in it; the February one is annual and should run for the full fifteen years.

Fifteen annual reminders is not excessive for an obligation that lasts fifteen years. It is the correct number.

What this page is not

Tax advice, and not a calculation. Your balance, start year, minimum and whether any of this applies are personal facts, and CRA publishes them in your account and on your notice of assessment. Those are authoritative; an article is not.

If you have already missed repayments, that is a conversation for CRA or an accountant, and sooner is better — each missed year quietly raises the next minimum.

What the rules do tell you plainly is the shape: money that felt like yours is a fifteen-year obligation, the clock starts years after you act on a rule that depends on when you acted, and the cost of forgetting is not a fine but your own retirement savings turning into taxable income.

Source: Canada Revenue Agency (canada.ca), Repay funds withdrawn from your RRSP under the Home Buyers' Plan — the 15-year repayment period and eligible plans, the second-year start for withdrawals before 2022 and the fifth-year start for first withdrawals between 2022 and 2025, the minimum calculated by dividing the HBP balance by the years remaining, and the treatment of any shortfall as RRSP income on line 12900.