11 August 1999 9913616 - ONTARIO MATRIMONIAL LAWS - HBP - "OWN A HOME"

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:

Whether matrimonial laws in Ontario confer property rights to a divorced taxpayer wishing to participate in the HBP?

Position:

No, unless the taxpayer effectively accept title or joint title to the house.

Reasons:

Unless a person effectively has title or joint title to the property, they do not "own" a house.

August 11, 1999

	Toronto Call Site	HEADQUARTERS
P. -A. Sarrazin

Attention: Art Allen, Client Assistance (613)952-9853
90
7-991361

Home Buyers' Plan and Matrimonial Property Law in Ontario

This is in reply to your request of May 13, 1999, for our views on whether a taxpayer could participate in the Home Buyers' Plan ("HBP"). She says she separated from her husband on XXXXXXXXXX but continued living under the same roof until XXXXXXXXXX. Her husband was the owner of the house they lived in. She will be divorced by the time she is ready to withdraw funds under the HBP.

In accordance with the definition of "eligible amount" in paragraph (d.1) of subsection 146.01(1) of the Income Tax Act, an individual is unable to withdraw such an amount under the HBP if the individual had an owner-occupied home in a certain period preceding the withdrawal.

Even where the individual did not have an owner-occupied home in that period, an amount will not be eligible for withdrawal if the individual's spouse had an owner-occupied home (an "owner-spouse") in the period and during the period the individual inhabited that home during the owner-spouse's marriage to the individual. However, when the individual is divorced at the time the withdrawal is made and has not otherwise regained the status of a spouse with someone who owns a house in which they reside, then the individual no longer has an owner-spouse and may qualify for a participation in the HBP. This is why the Department wrote, under "Step 2" of the table titled "Determining if you would be considered a first-time home buyer" on page 6 of guide RC-4135, Home Buyers' Plan (HSP) - For 1999 Participants: "Will you have a spouse when you withdraw an amount from your RRSP under the HBP? If you answer no, you would be considered a first time home buyer."

Finally, arises the issue of whether Ontario's matrimonial law confers rights to a separated or divorced spouse which would confer ownership upon such spouse as intended in the HBP legislation. In this case, we are of the view that, unless the taxpayer effectively obtained from the courts an order to transfer or vest in her the title to a qualifying home, she did not own this home as understood under the HBP provisions. Furthermore, if a transfer or vesting of a qualifying home did occur but, subsequent to the transfer or vesting, she did not inhabit the home as her principal place of residence, then she did not have an owner-occupied home as explained under paragraph 146.01(2) (a.1)

Form T1036, Applying to Withdraw an Amount Under The Home Buyers' Plan in 1999, specifically mentions that it is the participant's responsibility to ensure the first-time home buyer requirement is met. The taxpayer is best able to determine if she did obtain title or joint tenancy rights to a home following her separation or divorce procedures, or following the settlement of any prenuptial agreement.

We trust that these comments will be of assistance.

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