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: Where a Guarantor added to title to a property, is the otherwise qualifying individual for the HBP no longer eligible for the HBP?
Position: General comments provided
Reasons: Previous position
XXXXXXXXXX
2013-050468
George A. Robertson, CMA
December 11, 2013
Dear XXXXXXXXXX:
Re: Home Buyers Plan (HBP)
We are writing in response to your query as to whether an otherwise qualifying individual for the HBP remains qualified when a Guarantor is added to the title of the property.
This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
Our Comments
You will find the Canada Revenue Agency's general views regarding the HBP in the Guide RC4135 Home Buyers' Plan. In order to participate in the HBP, an individual has to satisfy several conditions which are described very clearly in the chart found on page 6 of the Guide. We note that all of the conditions have to be satisfied before an individual will be eligible to participate in the HBP and whether a specific individual would meet all of these requirements for participation in the plan is always a question of fact. This guide is available at www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-12e.pdf.
You indicate that you meet all the requirements of the HBP, yet are concerned that having your parents co-sign your mortgage and be on title with you would affect your eligibility for the HBP. You specify that your parents will not be occupying the house with you. The term beneficial ownership is discussed in paragraphs 2.79 to 2.82 of Income Tax Folio, S1-F3-C2: Principal Residence. This folio is available at www.cra- arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html#N11105.
Based solely on the information provided, it is our understanding that you and your parents intend that only you will be the beneficial owner of the home and that by putting your parents on the mortgage and deed they are simply acting guarantors to the lending institution in respect of the mortgage. In our view adding your parents as a guarantor to guarantee financing of your home would not preclude you from qualifying for the HBP provided all the other necessary conditions under the HBP are met.
We trust our comments will be of assistance.
Yours truly,
Sharmini Ratnasingham
for Director
Business & Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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