14 September 1995 Internal T.I. 9523056 - HOME RELOCATION LOAN

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Home Relocation Loan - Transfer of mortgage upon purchasing a new property

Position TAKEN:

Loan continues as a home relocation loan as long as the individual resides in the new property

Reasons FOR POSITION TAKEN:

IT-421R2 - Paragraph 22

			September 14, 1995

	HEADQUARTERS	HEADQUARTERS
	Source Deductions Division	Rulings Directorate
	DO/TC Support Services Section				J.P. Dunn
(613) 957-8953
	Attention: B. Larocque
			952305

XXXXXXXXXX - Home Relocation Loans

We are writing in response to your memorandum of August 29, 1995 wherein you had requested our comments with respect to the policy of the XXXXXXXXXX with respect to the "portability" of a "home relocation loan" as that term is defined in subsection 248(1) of the Income Tax Act (the "Act"). In order to assist in this review, you had provided a copy of an XXXXXXXXXX document entitled "XXXXXXXXXX".

As noted in paragraph 22 of Interpretation Bulletin IT-421R2 regarding "Benefits to Individuals, Corporations and Shareholders from Loans or Debt", the Department has stated, with respect to a loan which otherwise qualifies as a "home relocation loan", that,

if, within five years of relocation, the employee sells the residence and acquires a new one, and the home relocation loan financing is carried over to the new property or replaced by the employer, the employee would be permitted the deduction under paragraph 110(1)(j) for the balance of the five year period.

Accordingly, in such circumstances, the transferred loan would, for the purpose of claiming a deduction pursuant to paragraph 110(1)(j) of the Act, qualify as a "home relocation loan" to the extent that the original loan qualified as a "home relocation loan".

We would note, however, that the document from XXXXXXXXXX provided by you states under paragraph 'A' thereof regarding the purpose of the "XXXXXXXXXX", that the portability option allows a mortgagor to apply for the transfer of the outstanding principal amount and interest rate set out in an existing mortgage to an owner or non-owner occupied single family dwelling being purchased. Because the definition of a "home relocation loan" in subsection 248(1) of the Act requires that the dwelling "is" the new residence of the individual, it is our view that the transfer of a mortgage loan from an owner occupied to a non-owner occupied property would disqualify the loan as being a "home relocation loan" in respect of the individual.

We trust that this is the information which you require.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch