Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Would an individual qualify for the first-time home buyers' tax credit (HBTC) if the only consideration paid by the individual for the home is the assumption of an existing mortgage from the previous home owner?
Position: Yes - as long as all the conditions for the HBTC are met.
Reasons: The fact that the only consideration paid by the individual for a home is the assumption of an existing mortgage does not in itself preclude the individual from qualifying for the HBTC if all the conditions for the credit are met.
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on July 13, 2009, regarding the First-Time Home Buyers' Tax Credit (HBTC).
You want to know if you and your spouse will be eligible for the HBTC if you acquire a home that is subject to a mortgage and the only consideration given is the assumption of the mortgage from the previous owner. The legislation regarding the new HBTC, which was introduced in the federal budget tabled on January 27, 2009, has not yet been made public. The proposed HBTC will provide a non-refundable tax credit for first-time home buyers who acquire a qualifying home after January 27, 2009. The HBTC is claimed for the tax year in which the home is acquired and is calculated by multiplying the lowest personal income tax rate for the year by $5,000. For the 2009 tax year, the HBTC will be $750.
Mr. Flaherty has publicly announced that an individual will be considered a first-time home buyer if neither the individual nor the individual's spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years. A qualifying home is one that is currently eligible for the Home Buyers' Plan (HBP), that the individual or the individual's spouse or common-law partner intends to occupy as the principal place of residence no later than one year after its acquisition. Either an individual or an individual's spouse or common-law partner can claim the HBTC or share it. In the case of sharing, the total of both claims cannot exceed $750 for the 2009 tax year.
The fact that the only consideration paid for a home is the assumption of an existing mortgage does not in itself prevent you and your spouse from qualifying for the HBTC. As long as all the conditions for the HBTC are met, including the registration of your interest in the home in accordance with the applicable land registration system, you and your spouse will qualify to claim the HBTC.
You can find more information on the HBTC on the Canada Revenue Agency (CRA) Web site at www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html. For additional information on a qualifying home under the HBP, please refer to Guide RC4135, Home Buyers' Plan (HBP), a copy of which is available on the CRA Web site at www.cra.gc.ca/E/pub/tg/rc4135/README.html.
I trust that the information I have provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P
Minister of National Revenue.
Phyllis Waugh
(905) 721-5221
2009-033314
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