18 February 1997 External T.I. 9702795 - HOME BUYERS' PLAN INTENT

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 Buyers Plan: meaning of "intend to occupy"

Position:

Must intend to occupy at time of withdrawal. Intent may be frustrated later without consequence

Reasons:

Prior comments

XXXXXXXXXX 970279

February 18, 1997

Dear XXXXXXXXXX:

Re: Home Buyers Plan

This is in reply to your letter of January 21, 1997 in respect of the Home Buyers Program and the period in which you must intend to occupy the home.

Since your letter relates to an actual situation written determinations of the tax implications can only be given by the Department through your local Tax Services Office. However, we can provide the following general comments which may or may not apply to any particular situation.

The conditions relating to participation in the Home Buyer's Program are described in the Department's guide "Home Buyers' Plan (HBP) - For 1997 Participants" available at your local Tax Services Office. In general terms, you may withdraw funds from an RRSP under the program provided;

- you are a resident of Canada;

- you have never participated in the program previously;

- you are considered to be a first-time home buyer;

-you have entered into a written agreement to build or purchase a qualifying home;

-you buy or build the qualifying home or a replacement property by October 1 of the year following the year in which you receive the funds from the RRSP or, if certain conditions apply, you buy or build a qualifying home or replacement home by October 1 of the next year; and

-you intend to occupy the qualifying home as your principal place of residence within one year of buying or building the home.

Of critical importance in applying these terms is the determination of when you enter into an agreement to acquire a home and when you actually acquire the home. Generally a person enters into a written agreement to acquire a home at the time an agreement for the purchase and sale of a property is signed. On the other hand, a person will not normally acquire a property until the person acquires all the rights to the property including the right to occupy the property. This generally occurs when a house purchase is "closed".

When a person withdraws funds from an RRSP under the home buyers' program the person must certify that they intend to occupy the qualifying home as their place of residence within one year of acquiring the home. There is no provision for extending this time period. However, there is also no requirement that the home must actually be used as a principal place of residence at any time. Accordingly, if for some reason a property can not be used as a principal place of residence within the required period, the withdrawal will not be disqualified as an eligible withdrawal. However it should be noted that the Department will generally presume a purchaser did not intend to occupy a home as a principal place of residence within one year of its purchase if there are conditions that would prevent such an occupancy of the home within that period of time. This could occur, for example, where the property is acquired but rented to some other person.

We trust these comments will be of assistance to you.

Yours truly,

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