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:
Would a mortgage on a floating home be a qualified investment for RRSP purposes.
Position:
Yes, provided that the floating home is "real property" under the civil law of the province where the property is located.
Reasons:
Paragraph 4900(1)(j) of the Regulations requires that the mortgage must be in respect of "real property" situated in Canada and the term "real property" is not defined in the Income Tax Act or the Regulations.
5-962475
XXXXXXXXXX Franklyn S. Gillman
Attention: XXXXXXXXXX
August 28, 1996
Dear Sirs:
Re: Floating Home
This is in reply to your letter dated July 15, 1996 wherein you requested clarification as to whether a mortgage on a floating home is a qualified investment for the owner's registered retirement savings plan ("RRSP").
Since it appears that the interpretation you seek relates to a proposed transaction to be undertaken in the near future, we bring to your attention Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada, Taxation. Confirmation with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the above mentioned Information Circular. Nevertheless, we can offer the following general comments.
Where the mortgagor is the annuitant under the RRSP or is a person with whom the annuitant does not deal at arm's length, a mortgage may qualify under paragraph 4900(1)(j) of the Income Tax Regulations provided it satisfies all of the conditions therein, one of which is that the mortgage is in respect of real property situated in Canada. Therefore, if a mortgage is secured in whole or in part by chattels or other forms of security it would not meet the definition.
Since the term "real property" is not defined in the Act, it becomes a question of civil law whether property is real property or a chattel. In order to make this determination, one must refer to the law of the province in which the property is located.
These opinions are our best interpretation of the law as it applies generally. As stated in paragraph 21 of Information Circular 70-6R2 written opinions are not advance rulings and, accordingly, are not binding on the Department.
We trust these comments will be of assistance.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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