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Could the 2019 Federal Budget Help Those Separating?

Could the 2019 Federal Budget Help Those Separating?



In the past, the Home Buyers’ Plan (HBP) has allowed first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan to purchase a home without having to pay tax on the withdrawn amount (Budget 2019 proposes to increase the HBP limit to $35,000 per first-time home buyer). You are usually considered a first-time home buyer if you have not owned a home in the calendar year or prior four years. You can borrow the money from your RRSP which you will be obligated to begin repaying to your RRSP a few years down the road or the annual amount due will be added to your income.

Budget 2019 would allow persons who experience the breakdown of a marriage or common-law partnership be permitted to participate in the HBP even if they are notfirst-time home buyers.  

For HBP withdrawals made after 2019, the budget proposes to permit a taxpayer who otherwise would not be considered a first- time home buyer to be so considered if the following conditions are met: (per www.Canada.ca website)



  • At the time of the withdrawal, the individual must be living separate and apart from their spouse or common-law partner for at least 90 days,
  • Began living separate and apart from their spouse or partner, in the year of the withdrawal or the preceding four years,
  • If the individual has a new spouse or common-law partner at the time of the withdrawal, the new spouse or common-law partner does not own and occupy a home that is the individual’s principal residence,
  • Where the purposes of the HBP withdrawal is not to buy out the share of the residence owned by the former spouse or common-law partner, the former principal residence (matrimonial home) must be disposed of no later than two years after the withdrawal,
  • Following certain rules, an HBP withdrawal can be made to acquire (buy out the other spouse) the interest in the matrimonial home,
  • The changes will apply to HBP withdrawals made after 2019.

An option not previously available to separating couples, may make it easier for one or both spouses to make an HBP withdrawal to purchase a new home or for one to buy the other out of the matrimonial home. At a very difficult financial time, this additional help may be just enough to help taxpayers with the very difficult next steps to single life.

Want to learn more? Call us at 403.703.7176 or email sharon@albertadivrcefinances.ca.