CRA finds that a recent change of a home from rental to principal-residence use cannot ground an FHSA withdrawal

An individual purchased a single-family home in 2020 for rental to a third party, in May 2023 opened and contributed $8,000 to an FHSA and then, after the tenant vacated, and moved into the home as his principal place of residence on November 1, 2023, so that there was a deemed disposition and reacquisition of the property pursuant to s. 45(1)(a) on that date.

Regarding the requirement in para. (d) of the “qualifying withdrawal” definition in s. 146.6(1) that “the individual did not acquire the qualifying home more than 30 days before the particular time” of the withdrawal, CRA indicated that the deemed disposition and acquisition rule in s. 45(1) applied only for the purposes of the capital gains subdivision and not s. 146.6. Accordingly, the individual would be considered to have acquired the home more than 30 days previously even if he withdrew from his FHSA immediately after the deemed change in use, so that the “qualifying withdrawal” definition would not be satisfied.

Neal Armstrong. Summary of 3 November 2023 APFF Financial Strategies Roundtable, Q.1 under s. 146.6(1) - “qualifying withdrawal” - (d).