14 June 2010 External T.I. 2010-0357201E5 - First-Time Home Buyer Tax Credit

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.

Principal Issues: When can an individual claim the First-Time Home Buyers' Tax Credit (HBTC) for the purchase of a condominium, where the individual occupies it in one taxation year but is not registered as the legal owner until the subsequent taxation year when the condominium corporation is formed.

Position: In the subsequent taxation year when the individual is registered as the legal owner.

Reasons: Pursuant to subsection 118.05(2) of the Act, an individual is considered to have acquired a qualifying home only if the individual's interest (or for civil law, right) in it is registered in accordance with the land registration system or other similar system applicable where it is located.

XXXXXXXXXX
								2010-035720
								S.  Bernards
June 14, 2010

Dear XXXXXXXXXX :

RE: Qualification for First Time Home Buyers' Tax Credit

I am writing in response to your email of February 11, 2010 wherein you enquired with respect to the criteria to qualify for the First-Time Home Buyers' Tax Credit ("HBTC") and the year you could claim the HBTC if you qualified. Our understanding of the facts is as follows:

• You have been disabled since XXXXXXXXXX 2006,
• You were a home owner prior to XXXXXXXXXX 2006,
• In April 2009, you signed an agreement to purchase a condominium but the condominium was not completed and the condominium corporation was not formed at that time,
• You are paying rent to the builder of the condominium in the interim period prior to its acquisition,
• The condominium corporation is scheduled to be formed in 2010 and you intend to acquire the condominium in that year, and
• You and your wife are legally separated as of XXXXXXXXXX , 2009.

Our Comments

Pursuant to subsection 118.05(3) of the Income Tax Act ("Act"), an individual may claim the HBTC for a taxation year in which a "qualifying home" in respect of the individual is acquired. The HBTC is calculated by multiplying the lowest personal income tax rate for the year by $5,000. For the 2009 tax year, the HBTC is $750.

Pursuant to subsection 118.05(2) of the Act, an individual is considered to have acquired a qualifying home only if the individual's interests (or for civil law, right) in it is registered in accordance with the land registration system or other similar system applicable where it is located.

In this case, assuming that you are entitled to the federal disability tax credit in 2010 and that your interest in the condominium is registered in 2010 in accordance with the land registration system or other similar system applicable in your area, you may be entitled to claim the HBTC in 2010 (please note that all other criteria of the HBTC must also met; please refer to our website at: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html.) If you are not entitled to the federal disability tax credit in 2010 and your interest in the condominium is registered in 2010, you will not be eligible for the HBTC since you will not be considered a first-time home buyer because of the fact that you had owned a home in 2006.

We hope our comments will be of assistance.

Yours truly,

Randy Hewlett
Manger
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch