7 April 2010 External T.I. 2009-0347991E5 - Home Buyers' Plan - first-time home buyer

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: Is a taxpayer a first-time home buyer for purposes of the Home Buyers' Plan if the taxpayer resides in a home that the taxpayer rents from his or her wholly-owned corporation?

Position: Factual determination.

Reasons: The definition of "regular eligible amount" in subsection 146.01(1) refers to an owner-occupied home. Since in this case, the home is owned by a corporation that is not a cooperative housing corporation, it would not be an owner-occupied home of the taxpayer.

XXXXXXXXXX 							2009-034799

April 7, 2010

Dear XXXXXXXXXX :

Re: Home Buyers' Plan - First-time Home Buyer

This is in reply to your November 12, 2009 email, requesting our views on whether a husband and wife would be considered first-time home buyers under the Home Buyers' Plan ("HBP") and be able to participate in the HBP. You describe a situation where the husband and wife reside in a house on a farm that is wholly-owned by the husband's corporation. The husband and wife rent the house from the corporation.

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Ruling, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

Under the HBP provisions in section 146.01 of the Income Tax Act (the "Act"), an individual can withdraw funds from the individual's RRSP to buy or build a qualifying home. The CRA's general views regarding the HBP are expressed in Guide RC4135, Home Buyers' Plan. In order to participate in the HBP, the individual has to meet several conditions, as described in that guide. Where these conditions are met, the amount withdrawn would not have to be included in the individual's income under subsection 146(8) of the Act. Whether a specific individual would meet all of these conditions is a question of fact.

One of the conditions is that the individual qualifies as a first-time home buyer. An individual is not considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the RRSP withdrawal and ending 31 days before the withdrawal, the individual or the individual's spouse or common-law partner 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.

In a situation where an individual rents a home from a corporation which is not a cooperative housing corporation, the individual owns some or all of the shares of the corporation and the home is owned by the corporation, absent evidence to the contrary, the individual would not be considered as owning the home during the period that it is owned by the corporation for the purposes of determining whether the first-time home buyer condition is satisfied.

We trust that these comments are of assistance.

Yours truly,

Jenie Leigh
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch