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Discussion Starter · #1 ·
Hello,

I have a question about my wives Home Buyers Plan (HBP) for her 2019 taxes. She has an outstanding balance of roughly $10K to the HBP, and about 10 years to repay it. We are now a single income family, her income is $0.

Are there any tax strategies to get around her HBP repayments now that she is unemployed? I was thinking of claiming she has repayed the entire $10K to the HBP. She would have to pay income tax on $10K, but it would essentially be nothing since that is still under her basic personal exemption (roughly $13K). The result would be she has $10K less room on her RRSP contribution limit going forward, but that is fine with us. The benefit would be that if she goes back to work down the road, she would be getting the tax benefit of contributing to her RRSP immediately, rather than repaying the $10K first.
 

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Discussion Starter · #2 ·
I found an old thread on this forum that is essentially asking the same question.

(I can't post a link, but if you search "Why repay HBP if in lower tax bracket")

We are in the same position as this family (Single Income Family with defined pension, and stay at home wife).

For us, I don't think it makes sense to repay her HBP with after tax money. Am I right?
 

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Hello,

I have a question about my wives Home Buyers Plan (HBP) for her 2019 taxes. She has an outstanding balance of roughly $10K to the HBP, and about 10 years to repay it. We are now a single income family, her income is $0.

Are there any tax strategies to get around her HBP repayments now that she is unemployed? I was thinking of claiming she has repayed the entire $10K to the HBP. She would have to pay income tax on $10K, but it would essentially be nothing since that is still under her basic personal exemption (roughly $13K). The result would be she has $10K less room on her RRSP contribution limit going forward, but that is fine with us. The benefit would be that if she goes back to work down the road, she would be getting the tax benefit of contributing to her RRSP immediately, rather than repaying the $10K first.
I am assuming your plan is to try to get the taxed owed on non-payment of $10K to the HBP for 2019.

If that is your plan I am pretty sure you are out of luck. You can actually pay $10K towards the HBP in one year but you cannot default on 10K in one year, if that makes sense. On her Notice of Assessment, there will be a mandatory number that she has to pay for 2019. Probably around $1,000. That is the most she can default on and have the taxes payable owed for that year.

Now that said. Keep in mind that although you are correct. Income below $13,229 would result on almost no taxes payable (the provincial exemptions are a little lower), whatever amount she saves, you will pay via a reduced spousal tax credit. In other words, any income she shows that avoids taxation because of the use of her personal exemption will result in the very same amount of tax owed by you by the reduction of your spousal tax credit.

Out of your pocket into hers. Isn't it neat the way that works? lol

Anyway, that is how I understand your issue breaking, assuming I understood it right.
 
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