Tax Planning
Extended Timelines for Home Buyers’ Plan & Labour Mobility Deduction Boosts
The government is expanding grace periods for RRSP repayment and increasing deductions for mobile workers—here’s what this means for you and when it takes effect.
By NomadicTax Research Team • 5-8 min read • August 26, 2026
## What’s Changing Under Spring Economic Update 2026
Bill C-30, passed by Parliament on **June 19, 2026**, enacts several critical changes: extending repayment timelines under the Home Buyers’ Plan and expanding the Labour Mobility Deduction. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai)) Effective dates differ by measure.
### Home Buyers’ Plan (HBP)
- People who make their first HBP withdrawal between **January 1, 2026** and **December 31, 2028** will benefit from a **five-year grace period** before repayments must begin—up from the previous two years. This is for RRSP withdrawals used for first-time home ownership. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/pdf/update-miseajour2026-eng.pdf?utm_source=openai))
- For someone withdrawing \$60,000, the annual repayment remains 1/15 each year, but now with three extra years of grace, easing cash flow for new homeowners. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/pdf/update-miseajour2026-eng.pdf?utm_source=openai))
### Labour Mobility Deduction Enhancements
- The **minimum distance** you must move to claim the deduction has been lowered from **150 km to 120 km**.
- The **maximum deduction** has been increased **from \$4,000 to \$10,000 per year**. These apply for workers who relocate or travel for work and meet other eligibility requirements. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
## Practical Impact & Planning Tips
- If you're considering buying your first home and expect to use the RRSP for HBP, plan eligibility within 2026–2028 to exploit the extended grace period.
- Use the extra grace period to prioritize other financial obligations post-home purchase—such as moving or renovation costs—while deferring repayment.
- For mobile workers, keep records of relocation and miles to ensure compliance for claiming deductions. Larger max deduction (\$10,000) significantly helps those commuting or working across provinces.
## Example Scenario
**First-time home buyer**, Sarah withdraws \$35,000 from RRSP in **July 2026** for purchase. Under old rules, she would begin repayment in 2028. Under new rules, she begins in **2029**, giving her additional time to manage finances.
**Electrician**, Michael travels for work between towns that are 130 km apart. Previously ineligible because under 150 km threshold. Now qualifies, and can deduct up to \$10,000 for eligible moving and travel expenses—much higher than earlier cap.
## Action Plan for Individuals & Families
- If buying first home, act in 2026–2028 to take advantage of extended repayment grace period.
- Document the date of first RRSP withdrawal and keep all purchase contracts, legal docs.
- If commuting or relocating, calculate eligible expenses carefully—distance >120 km – maintain mileage logs or travel receipts.
- Talk to a tax professional to ensure your claims are properly filed and avoid triggering clawbacks or audits.
**Bottom line**: The extended HBP grace period and more generous Labour Mobility Deduction rules are helpful tools that improve cash flow and tax relief. Use them wisely while they are available.