The Fine Print Canada · PUBLISHED 16 JUL 2026 · VERIFIED 16 JUL 2026 · CA EDITION

How Your HBP Repayment Adds $4,000/Year to Taxable Income

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If you withdraw the full $60,000 under the Home Buyers’ Plan and forget to file the right repayment form, the CRA can quietly add $4,000 or more to your taxable income every year for 15 years—and you may never notice until your tax bill keeps creeping up.

The number that matters

$4,000/year — minimum HBP repayment on a $60,000 withdrawal — CRA, 2024

Under the updated Home Buyers’ Plan limit of $60,000 per person, you must repay at least 1/15 of your withdrawal—$4,000 per year—or the unpaid portion is added to your taxable income for that year.

How it quietly costs you

Mechanism: the “forgotten repayment” becomes taxable income

• The Home Buyers’ Plan lets you withdraw up to $60,000 from your RRSP to buy or build a home without paying tax at the time of withdrawal, if you follow CRA rules.
• Repayments start the second year after the year of withdrawal and must be spread over up to 15 years, with a minimum 1/15 of the total withdrawn due each year.
• To count as a repayment, you must:
• Make an RRSP/PRPP/SPP contribution in the repayment year or first 60 days of the following year.
• Designate that contribution as an HBP repayment on Schedule 7, line 24600, attached to your income tax and benefit return.

If you do not designate enough repayment:

• CRA requires you to include the difference between the minimum annual repayment and your designated HBP repayment as RRSP income on line 12900 of your tax return.
• For a $60,000 withdrawal, minimum repayment is $4,000/year; if you only designate $1,000, then $3,000 must be added to income that year.

Old vs better comparison (same $60,000 withdrawal):

• “Forgotten” repayment (bad):
• Minimum required: $4,000/year.
• If you repay but don’t file Schedule 7 correctly, CRA treats the deposit as a new RRSP contribution, adds the missed amount to your income, and uses up contribution room at the same time.
• Properly designated (better):
• Same $4,000 contribution, correctly designated on Schedule 7.
• No addition to taxable income for that year; HBP balance decreases by $4,000 instead of generating tax.

Concrete annual impact:

• At a 30% marginal tax rate, having $4,000 added to income for a missed repayment costs roughly $1,200 in tax for that year (simple multiplication: (4,000 \times 0.30)).
• Over all 15 years, missing the minimum every year on a $60,000 withdrawal would mean the full $60,000 is taxed as regular income instead of being rebuilt in your RRSP.

The second, compounding trap

Mechanism: misreporting burns RRSP room and permanently closes the HBP door

Beyond the tax hit, a second hidden cost is the loss of RRSP contribution room and HBP flexibility when repayments are not reported correctly.

• Once an unpaid portion of the annual minimum is added to income, that amount has not historically been eligible for future HBP repayment treatment—it is effectively “out” of the plan forever.
• If you make RRSP contributions but don’t designate them as HBP repayments on Schedule 7, CRA treats them as regular RRSP contributions, using up your RRSP contribution room for that year while still adding the missed repayment amount to your income.
• A tax practitioner video notes that without Schedule 7 filed correctly, the CRA “treats that deposit as a new RRSP contribution, adds the missed repayment to your taxable income, and permanently burns your contribution room — all at the same time.”

Long‑run financial impact (illustrative):

• Assume:
• HBP withdrawal: $60,000.
• Minimum annual repayment: $4,000.
• Marginal tax rate: 30%.
• RRSP investments could earn 5% annually (common planning assumption).

If each year $4,000 is added to income instead of repaid:

• Annual tax cost: about $1,200/year (30% of $4,000).
• Lost RRSP growth: that $4,000 never goes back into the RRSP to grow tax‑deferred.
• Over 15 years, missing all required repayments:
• Total added to income: $60,000.
• Total tax paid (at 30%): roughly $18,000.
• Foregone RRSP balance: if the $60,000 had stayed invested at 5% for 15 years, it could grow to about $124,000 (simple compound interest estimate).

So, the combined cost is not just the $18,000 tax but also about $64,000 in missed investment growth versus having the money inside the RRSP for retirement (difference between $124,000 and the $60,000 withdrawn).

What this looks like in practice

Persona:

• Name: Sarah
• Age: 35
• Location: Canada
• Job: Marketing manager
• Income: $85,000/year employment income
• RRSP balance before HBP: $70,000
• HBP withdrawal: $40,000 to buy first home in 2024
• Years to retirement: 30 years
• Marginal tax rate (approx.): 29–30%

From CRA rules:

• Sarah’s minimum annual repayment is 1/15 of $40,000 = $2,666.67, usually rounded to $2,667/year.
• Repayments start in 2026 (second year after her 2024 withdrawal), with the first due by the 2026 tax filing deadline or within the first 60 days of 2027.

Discovery 1 — the “missing” $2,667 she didn’t know was taxable

Sarah thought that as long as she “put something back” into her RRSP, she was fine.

• In 2026 she contributed $1,500 to her RRSP but did not file Schedule 7 or designate it as an HBP repayment.
• CRA’s rule: if she repays less than the required minimum annual repayment, she must include the difference as income on line 12900.
• Required minimum: $2,667
• Designated repayment: $0 (because no Schedule 7 filed)
• Amount added to income: $2,667 for 2026.
• At a 30% marginal rate, that extra $2,667 triggers roughly $800 in additional tax for that year (approximate calculation).

Compared to what she believed (“I made a deposit, so I’m good”), she’s paying about $800 extra tax and her HBP balance hasn’t dropped at all.

Discovery 2 — her RRSP room got burned for no benefit

Sarah then learns that her $1,500 RRSP deposit:

• Is recorded by CRA as a regular RRSP contribution because it wasn’t designated as an HBP repayment.
• Uses up $1,500 of her RRSP contribution room for 2026.
• Does not reduce her HBP balance, which remains at $40,000 minus any properly designated repayments.

So she has:

• $1,500 locked in RRSP (good), but:
• No reduction of her HBP required repayments.
• $2,667 added to income, costing her about $800 in tax.

Compared to filing Schedule 7 properly, she loses:

• A chance to have her $1,500 count toward the $2,667 minimum.
• About $450 in tax savings she could have had if only $1,167 needed to be added to income instead of $2,667 (difference between tax on $2,667 vs $1,167 at 30%).

Discovery 3 — the long‑run cost over 15 years

If Sarah keeps missing $1,000 of the required minimum every year:

• Minimum required: $2,667/year.
• Actual designated repayment: $1,667/year (for example).
• Shortfall added to income: $1,000/year.
• At 30% marginal rate, extra tax: about $300/year.

Over the 15‑year repayment period:

• Total extra taxable income: $15,000.
• Total extra tax paid: about $4,500.

Compared to doing nothing wrong (accurate repayment and designation), Sarah has paid $4,500 more tax and her RRSP is $15,000 smaller than it could have been—before accounting for lost investment growth.

The full cost of doing nothing

For Sarah, the combined lifetime impact of Problems 1 and 2 is the lost RRSP balance plus extra tax from repeated mis‑designation.

Modelling basis (Sarah’s $40,000 HBP withdrawal):

• Minimum annual repayment: $2,667 for 15 years.
• Scenario: she consistently under‑designates $1,000 each year.
• Shortfall added to income: $1,000/year × 15 = $15,000.
• Marginal tax rate: 30%.
• Extra tax: $15,000 × 0.30 = $4,500 over 15 years.
• Lost RRSP contributions: $1,000/year not repaid × 15 years = $15,000.
• If that missing $15,000 had been invested in her RRSP at 5% annual return for an average of 7–15 years (assuming staggered contributions), it could reasonably grow to around $25,000–$30,000 by retirement (simple compound interest estimate).

So combined, she’s down roughly:

• $4,500 in extra tax; plus
• About $10,000–$15,000 in missed investment growth on the $15,000 shortfall.

Headline impact: a realistic, careful taxpayer like Sarah can be out $15,000–$20,000 or more by retirement purely because HBP repayments weren’t correctly designated and the missed amounts were quietly added to income year after year.

What to do about it

1. Check your HBP balance and minimum repayment at CRA

1. Action: Verify your HBP balance and required minimum repayment.
2. Tool/portal: CRA My Account – “RRSP and HBP” section. CRA maintains a record of your total HBP withdrawals, remaining balance, and annual required repayments.
3. Steps:

• Log in to CRA My Account.
• Navigate to your RRSP and related plans information and find the Home Buyers’ Plan details.
• Note your remaining HBP balance and the minimum annual repayment shown for the current tax year.

4. What “good” looks like: Your own record of repayments and the CRA‑listed remaining HBP balance match, and you understand the exact dollar amount you must repay (e.g., $2,667/year on a $40,000 withdrawal).

2. Designate your repayments correctly on Schedule 7

1. Action: Make sure every RRSP deposit intended as an HBP repayment is designated on your tax return.
2. Tool/portal: Schedule 7 – RRSP, PRPP and SPP Contributions and Transfers, and HBP and LLP Activities, filed with your T1 return.
3. Steps:

• Make an RRSP contribution in the repayment year or within the first 60 days of the following year equal to at least your minimum annual repayment.
• On your tax software or paper return, complete Part B of Schedule 7 for years after the first withdrawal, and enter your HBP repayment on line 24600.
• Ensure this Schedule 7 is attached/submitted with your income tax and benefit return so the CRA records the amount as an HBP repayment, not just a regular RRSP contribution.

4. What “good” looks like:

• Your RRSP contribution equals or exceeds your CRA‑listed minimum repayment.
• Line 24600 on Schedule 7 shows at least that minimum amount.
• No HBP repayment shortfall appears as income on line 12900 of your return for the year.

3. Fix past mistakes using CRA’s adjustment tools

1. Action: Correct mis‑reported HBP repayments for prior years within CRA’s adjustment window.
2. Tool/portal: CRA My Account – “Change my return” (ReFILE/T1 adjustment).
3. Steps:

• Log in to CRA My Account and select “Change my return” for the relevant tax year.
• Review that year’s Schedule 7 (if filed) and your RRSP contribution slips; identify contributions that should have been designated as HBP repayments.
• Submit an adjustment to add or correct entries on Schedule 7 (line 24600) so those RRSP deposits are recognized as HBP repayments instead of regular contributions, where CRA’s 10‑year adjustment window allows it.

4. What “good” looks like:

• Past RRSP contributions that were intended as HBP repayments are correctly designated.
• Your HBP remaining balance on CRA My Account drops to what it should be, and fewer missed repayments are being added to income in current and future years.

A myth worth clearing up

Myth: “As long as I put money back into my RRSP after using the Home Buyers’ Plan, I’ve repaid it—the CRA will figure it out.”

Fact: CRA only treats RRSP deposits as HBP repayments if you explicitly designate them on Schedule 7; otherwise they are standard RRSP contributions, and any shortfall from the minimum annual repayment is added to your taxable income on line 12900.

Evidence:

• CRA states that to make a repayment under the HBP you must make contributions and designate all or part of the contributions as a repayment on Schedule 7, line 24600, and continue filing returns until all withdrawals are repaid or included in income.
• CRA also states that if you repay less than the required minimum in a year, you must include the difference as RRSP income on line 12900.
• CRA specifically instructs that RRSP contributions designated as HBP repayments are not to be reported on line 20800, clarifying they are different from regular RRSP contributions.

Sources

• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/repay-funds-withdrawn-rrsp-s-under-home-buyers-plan.html
• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/report-repayments-on-your-income-tax-benefit-return.html
• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/avoid-common-home-buyers-plan-mistakes.html

Researched 2026-07-16.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.