# HBP overpayment



## Four Pillars (Apr 5, 2009)

I have a question about repaying the Home Buyer Plan (HBP). If you don't repay your HBP amount each year, it gets added to your income.

For someone in a low income tax bracket, they might be better off not repaying it and just paying the (minimal) taxes and contributing to their TFSA instead.

My question is - can you "not pay" more than the amount of HBP you owe for that year? I know if you are making HBP repayments into an RRSP, you can pay off the whole loan at once if you wish. Can you do the same thing if you aren't making contributions?

An example to try to clarify:

Bob owes $1333 each year for the HBP. One year he is unemployed and decides not to make any payments to his RRSP and instead decides to declare the $1333 as income and pay the taxes. Can he decide to declare a higher amount ie $5,000 and pay the taxes on that?


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## MoneyGal (Apr 24, 2009)

Nah, it is automatically spread over the 15 years. You may recall I did this for a few years when I had no income, and I asked the same question of CRA. You can pay it off early, but you can't NOT pay it off early.


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## Four Pillars (Apr 5, 2009)

Thanks MG. I guess it makes sense, since they don't want someone to "not repay" all of their HBP in a low income year.

I was asking on behalf of my wife. There isn't any real financial reason to "not pay" it off early, but it would be nice to just get rid of it once and for all.


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## Westerly (Dec 26, 2010)

Hi MG and FP: This is just a thought, and I haven't researched it: could you pay it off early and then cash out the RRSP at the same time / in the same year? Might accomplish the same result.


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## Four Pillars (Apr 5, 2009)

Westerly said:


> Hi MG and FP: This is just a thought, and I haven't researched it: could you pay it off early and then cash out the RRSP at the same time / in the same year? Might accomplish the same result.


That's good. Thanks - I'll keep that in mind, since we might do exactly that in the next couple of years.


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