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, asking whether an individual can claim the first-time home buyers' tax credit (HBTC) if he or she acquired a home by assuming 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 calculated by multiplying the lowest personal income tax rate for the year by $5,000 and is claimed for the tax year in which the home is acquired. For the 2009 tax year, the credit 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) and that the individual or individual's spouse or common-law partner intends to occupy as the principal place of residence no later than one year after buying it. Either an individual or an individual's spouse or common-law partner can claim the credit or share the credit. However, the total of both claims cannot be more than $750 for the 2009 tax year.
The fact that an individual assumed an existing mortgage does not prevent the individual from qualifying for the HBTC. As long as all the conditions for the HBTC are met, including that the individual's interest in the home is registered according to the applicable land registration system, the individual will qualify to claim the HBTC.
You can find more information on the HBTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hbtc. 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 at www.cra.gc.ca/E/pub/tg/rc4135.
I trust that the information provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
Phyllis Waugh
(905) 721-5221
2009-033318
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