Home Buyers' Plan and FHSA for Pre-Construction Condos in Ontario: Timing Rules
Yes, you can use the Home Buyers' Plan (HBP) or the First Home Savings Account (FHSA) to buy a pre-construction condo or townhome in Ontario. Both programs let first-time home buyers withdraw funds tax-free to purchase a qualifying home. The key is understanding the timing rules—especially for pre-construction purchases where your deposit date and closing date may be months or even years apart.
What is the Home Buyers' Plan?
The Home Buyers' Plan allows you to withdraw up to $60,000 from your RRSP to buy or build a home. You repay the amount over 15 years, starting in the fifth year following the year of your first withdrawal (if you made your first withdrawal between January 1, 2026, and December 31, 2028). Your RRSP issuer does not withhold tax on withdrawals of $60,000 or less.
You can make multiple withdrawals from your RRSPs under the HBP, but only in the same calendar year as your first withdrawal and in January of the following calendar year.
What is the FHSA?
The First Home Savings Account (FHSA) is a registered account where you can save and invest for your first home purchase. You can make a qualifying withdrawal from your FHSA tax-free when you buy a qualifying home. Unlike the HBP, you do not need to repay qualifying withdrawals from your FHSA.
What qualifies as a pre-construction home?
Both the HBP and FHSA recognize pre-construction homes as qualifying purchases. A qualifying home includes:
- Single-family homes
- Semi-detached homes
- Townhouses
- Mobile homes
- Condominium units (including pre-construction condos)
- Apartments in duplexes, triplexes, fourplexes, or apartment buildings
- Shares in a co-operative housing corporation that give you equity interest in a housing unit
With a pre-construction home you sign the agreement long before the home is finished, so plan any withdrawal around your expected closing date, and confirm with CRA or an accountant which date counts as acquiring the home in your case.
The critical timing rule: acquisition before October 1
This is where pre-construction purchases require careful planning. For both the HBP and FHSA, the home (or replacement property) must be acquired or built before October 1 of the year following the year of your first withdrawal.
Example: If you make your first HBP or FHSA withdrawal in July 2026, your pre-construction condo must close (you must have acquired it) before October 1, 2027.
This deadline is based on your withdrawal date, not your deposit or purchase agreement date. For pre-construction purchases with long build timelines, this timing can be tight.
What if your closing date is after October 1?
If your pre-construction condo will not close before the October 1 deadline, you may still qualify if:
For the HBP:
- You have a written agreement before October 1 to acquire the home or a replacement property before October 1 of the second year after your withdrawal, or
- You have made payments to contractors or suppliers (at arm's length) for materials or construction that equal at least the total of all your HBP withdrawals, and these payments were made between your first withdrawal and before October 1 of the year after your withdrawal.
For the FHSA:
- You must have a written agreement with an acquisition or construction completion date before October 1 of the year following your withdrawal.
You need a written agreement
Both programs require a written agreement to buy or build the home at the time of your withdrawal. For a pre-construction condo, this is your purchase agreement with the builder or developer. A pre-approved mortgage does not count as a written agreement.
You must occupy the home within one year
After you acquire the home (close on it), you must intend to occupy it as your principal place of residence within one year. This applies to both the HBP and FHSA.
Withdrawal timing vs. closing timing
Many first-time buyers are confused about when to make their withdrawal. The withdrawal must happen before or at the time you acquire the home, but the key deadline is the acquisition date (closing date), not the deposit date.
For pre-construction purchases:
- You sign a purchase agreement with the builder (this satisfies the "written agreement" requirement).
- You make your HBP or FHSA withdrawal before or at closing.
- Your closing date must fall before the October 1 deadline.
- You must move in within one year of closing.
If your closing is delayed and falls after the October 1 deadline, your withdrawal may become ineligible, and you could owe tax on the full amount withdrawn.
First-time home buyer eligibility
To use the HBP or FHSA, you must be a first-time home buyer. This means you did not live in a home as your principal place of residence that you owned or jointly owned:
- At any time in the current calendar year before the withdrawal (except the 30 days immediately before), or
- At any time in the preceding four calendar years.
If you are buying the pre-construction condo with a spouse or common-law partner who is not a first-time home buyer, you can still make a qualifying withdrawal if you meet the first-time buyer test. Your partner's ownership history does not disqualify you.
You must be a Canadian resident
You must be a resident of Canada from the time you make your first withdrawal until you acquire the home (or until your death, whichever comes first).
Can you use both HBP and FHSA for the same pre-construction condo?
Yes. You can withdraw amounts from your RRSP under the HBP and make a qualifying withdrawal from your FHSA for the same pre-construction condo, as long as you meet all the conditions for each withdrawal at the time you make it.
Frequently asked questions
Can I make my HBP withdrawal before I sign the purchase agreement?
No. You must have a written agreement to buy or build the home at the time of your withdrawal. For a pre-construction condo, this is your purchase agreement with the builder.
What happens if my pre-construction condo closes after October 1?
If your closing date is after the October 1 deadline and you do not meet the extension conditions (for the HBP), your withdrawal may be treated as ineligible. You would have to include the withdrawn amount as income on your tax return for the year of withdrawal. Confirm your exact closing date with the builder and your accountant before withdrawing.
Does my deposit date count as the acquisition date?
No. For a pre-construction condo, acquisition is the date you are entitled to immediate vacant possession—your closing date. Your deposit date is when you sign the purchase agreement, which satisfies the "written agreement" requirement, but it is not the acquisition date.
Can I withdraw from a locked-in RRSP under the HBP?
Normally, no. Locked-in RRSPs and group RRSPs do not allow HBP withdrawals. Check with your RRSP issuer to confirm whether your account is eligible.
Do I have to repay my FHSA withdrawal?
No. Qualifying withdrawals from your FHSA do not need to be repaid. This is one key difference from the HBP, where you must repay the amount over 15 years.
What if I do not occupy the condo within one year of closing?
You must intend to occupy the home as your principal place of residence within one year of acquiring it. If you do not meet this condition, your withdrawal may be treated as ineligible, and you could owe tax on the amount withdrawn.
How Dinesh can help
Dinesh works with first-time home buyers and pre-construction condo purchasers in the GTA to navigate purchase timelines, closing dates, and financing options. Understanding when to make your HBP or FHSA withdrawal is crucial for pre-construction deals—timing mismatches can create tax problems. Dinesh can help you coordinate your purchase agreement, closing date, and withdrawal strategy. Book a call to discuss your pre-construction purchase and confirm your timeline.
Sources
Source: Search Console topics. This post summarises a public announcement and adds local context. It is not financial or legal advice.
What does this mean for you?
Book a free 15-minute call and Dinesh will walk you through how it affects your plans.
