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: Whether an individual who jointly owned a home with her separated or former husband qualifies as first-time home buyer.
Position: No, if the individual inhabited the residence at any time during the 4-year period.
Reasons: Application of the Act.
2009-034709
XXXXXXXXXX Andrea Boyle
(613) 957-8971
March 3, 2010
Dear XXXXXXXXXX :
Re: The Home Buyers' Plan
This is in reply to your email of November 6, 2009 in which you requested our comments on whether you would be considered a first-time home buyer for the purposes of the Home Buyers' Plan ("HBP") and would be able to participate in the HBP in 2010.
More specifically, you have indicated that you previously jointly owned a home with your husband from whom you are now separated and that, at the time of the separation in 2006, the title of the home was legally transferred to your husband.
The particular situation outlined in your email appears to relate to a factual one, involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be of assistance.
The Canada Revenue Agency's general views regarding the HBP are in the guide titled "Home Buyers' Plan (HBP)" (RC4135). In order to participate in the HBP, an individual has to satisfy several conditions, which are described in the Guide.
One of the conditions required for participation in the HBP is that the individual qualify as a first-time home buyer. An individual would not be 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 withdrawal and ending 31 days before the HBP withdrawal, the individual had an owner-occupied home or the individual's spouse or common-law partner owned a home that the individual occupied as their principal place of residence. 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.
Therefore, as one of the conditions for participation in the HBP in 2010, an individual cannot have owned and occupied a home as described above at any time during the period beginning January 1, 2006 and ending 31 days before any HBP withdrawal in 2010.
The Act does not contain any provision that limits the above-mentioned period when an owner-occupied home was sold or transferred as a consequence of a marriage breakdown. However, it should be noted that the important date in determining when an individual who owned a home will once again qualify as a first-time home buyer is the date where an individual ceases to reside with his or her separated spouse in the home. This would be the case even though the individual is a registered owner of the home that continues to be inhabited by his or her separated spouse. The determination of whether an individual lived in an owner-occupied home in the qualifying period is always a question of fact.
The "exception" to the time period limit that you have referred to in your email can be clarified by answering the question on page 6 of the "Home Buyers' Plan (HBP)" (RC4135) in the box titled "Are you considered a first-time home buyer in 2009?" An individual will be considered a first-time home buyer when the individual did not own and occupy a home as his or her principal place of residence and the individual does not currently have a spouse or common-law partner. Depending on the facts, an individual may also qualify where he/she currently has a spouse or common-law partner. In the situation where an individual previously inhabited a home owned solely by the individual's spouse and the couple is now divorced, the divorced individual may also qualify. If, at the time the withdrawal is made, the divorced individual does not have a new spouse or common-law partner who owns a house in which the individual cohabits or resides, the individual may qualify for participation in the HBP.
We trust that these comments will be of assistance.
Yours truly,
Louise J. Roy
Manager
for Acting Director
Ontario Corporate Tax
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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