Tax Planning
Extended Grace for Home Buyers and Increased Relocation Deductions: How to Maximize Recent Reliefs
Two new proposals in the 2026 Spring Economic Update expand relief for first-home buyers and tradespeople who relocate—essential tools for affordability if you qualify.
By NomadicTax Research Team • 5-8 min read • May 18, 2026
## Key Proposed Changes in Spring Economic Update 2026
The government has introduced two major proposals aimed at easing financial pressure on home buyers and individuals in skilled trades who temporarily relocate for work. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
### 1. Extended Grace Period for HBP Repayments
- Under the **Home Buyers’ Plan (HBP)**, eligible individuals can withdraw up to **$60,000** from their RRSP to buy or build their first home without immediate tax. Withdrawals must be repaid over 15 years, normally beginning the second year after withdrawal. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
- Previously, the government temporarily increased the grace period (i.e. delay before repayment begins) from 2 to **5 years** for those who made a first withdrawal between Jan 1, 2022, and Dec 31, 2025. ([pwc.com](https://www.pwc.com/ca/en/services/tax/budgets/2026/2026-federal-spring-economic-update.html?utm_source=openai))
- Now the proposal is to **extend that 5-year grace period** to those making their first HBP withdrawal **up to the end of 2028**. This means repayment would begin five years after withdrawal for new users whose first withdrawal occurs by Dec 31, 2028. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
### 2. Higher Labour Mobility Deduction for Tradespeople
- The existing limit for temporary relocation deductions is **$4,000 per year** for tradespeople/apprentices working at temporary work locations who must relocate. There’s also a distance requirement (150 km closer). ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
- Proposed is an increase of the **deduction limit to $10,000** for the 2026 and subsequent tax years, with annual indexation. Also, the distance rule will be modified: temporary lodging must be at least **120 km closer** rather than previous 150 km for eligibility. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
## Who Benefits — and How to Use These Reliefs
| Group | How They Benefit | Steps to Leverage |
|-------|------------------|------------------|
| First-time or early home buyers | More breathing room before RRSP repayments—means more flexibility in cash flow when buying a home. | Keep track of withdrawal dates; make sure first withdrawal ≤ end of 2028 to qualify. Plan budgeting accordingly. |
| Tradespeople/apprentices | Ability to claim relocation costs more fully—covers more expenses and reflects real relocation burdens. | Save receipts for lodging and travel; ensure move is temporary; confirm distance meets 120 km rule; document employer-assignment and duration. |
## Practical Example
- **Home buyer**: Alex plans to use the HBP first time in 2027, withdrawing in 2027. Under the proposed change, they won't need to repay until **2027 + 5** = **2032**, instead of starting in 2028. That gives Alex more time to adjust finances post-purchase.
- **Tradesperson**: Casey, a carpenter living in City A, gets temporarily assigned to City B where their jobsites are 130 km further. With relocation lodging for several weeks, Casey can deduct up to $10,000 of eligible temporary relocation expenses in 2026. Under new rule, lodging qualifies since City B is 120 km closer (meeting modified requirement).
## Important Caveats & Compliance Tips
- These proposals still need legislative motion to pass—keep an eye on final law enactment. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/tm-mf-en.html?utm_source=openai))
- The labour mobility deduction applies **only for temporary assignments** and for registered trades/apprentices. Permanent relocations don’t qualify.
- Keep all receipts and records of travel, lodging, assignments and employer orders. Distance and timing requirements must be met strictly.
- For HBP, ensure the first withdrawal falls **within the window** to qualify for the extended grace period. Plan if you’re near the deadline.
## Take-Home Summary
- If you're buying your first home—or planning to—don’t rush RRSP repayment: the five-year grace period could ease financial strain, **but you must act by end of 2028** for your first withdrawal.
- Tradespeople working across distances can expect stronger deductions, particularly for lodging and travel, reflecting higher real costs of temporary relocations.
- Always check the official CRA guidance and ensure your year of withdrawal or relocation meets eligibility rules once enacted.
These changes, once law, can deliver real savings.