1 November 1999 External T.I. 9917155 - HOME BUYERS' PLAN

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:

1) Can an individual who owned a home jointly with his wife participate in the Home Buyers' Program
2) What is the maximum withdrawal out of an RRSP for the Home Buyers' Program

Position:

1) Question of Fact - If the individual is considered to be a first-time home buyer, then he/she will be eligible for participation in the Home Buyers' Program
2) Maximum amount of $20,000

XXXXXXXXXX 991715
M. P. Baldwin
November 1, 1999

Dear XXXXXXXXXX:

Re: Qualifying for the Home Buyers' Plan

This is in reply to your facsimile dated June 21, 1999, wherein you request assistance in determining whether you qualify for participation in the Home Buyers' Plan as described in section 146.01 of the Income Tax Act (the "Act").

It appears that the fact situation in your facsimile relates to a proposed transaction to be undertaken by a specific taxpayer and, therefore, we bring to your attention Information Circular 70-6R3 dated December 30, 1996, issued by Revenue Canada. Confirmation of tax consequences 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 a specific proposed transaction, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can provide you with the following general comments.

The Department's general views regarding the Home Buyers' Plan are in the guide titled "Home Buyers' Plan (HBP) - For 1999 Participants" (RC4135). In order to participate in the HBP, an individual has to satisfy several conditions which are described in the Guide. Copies of the Guide are available at your local tax services office or on the Revenue Canada Internet site (www.rc.gc.ca).

One of the conditions required for participation in the HBP is that the individual qualify as a first-time home buyer. For participation in 1999 an individual would not be considered a first-time home buyer if, at any time during the period beginning January 1, 1995 and ending 31 days before any HBP withdrawal in 1999, the individual or the individual's spouse had an owner-occupied home. An individual will be considered to have an owner-occupied home where the individual owns (jointly or otherwise) a housing unit and the housing unit is inhabited by the individual as the individual's principal place of residence at that time.

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 in the period and during the period the individual inhabited that home while married to the owner-spouse. 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 the individual resides, the individual no longer has an owner-spouse and may qualify for participation in the HBP.

To participate in the HBP in the year, you have to receive all the withdrawals from your RRSPs in that year. For example, if you participate in the HBP in 1999, you must receive all the withdrawals in 1999. However, if you receive an amount from your RRSP in January 2000, we will consider the amount to have been received in 1999. An individual can withdraw up to $20,000 tax-free from their RRSPs under the HBP and can make more than one withdrawal as long as the total of their withdrawals is no more than $20,000.

We trust that the above comments will be of assistance to you.

P. Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate