24 October 1996 External T.I. 9634255 - ACQUIRING HOME MORE THAN 5 YEARS BEFORE DATE

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 an owner-occupied home sold more than 5 years ago and which is to be acquired by the previous owners under the Home Buyers Program is a qualifying home acquired more than 30 days before the RRSP funds are withdrawn causing the amount not to be an "eligible amount".

Position:

No.

Reasons:

"Qualifying home" as used in paragraph (d) of "eligible amount" definition is the home which is the subject of the agreement of purchase and sale and which is therefore not acquired more than 30 days before the amount is withdrawn notwithstanding its previous ownership.

XXXXXXXXXX							963425

October 24, 1996

Dear Sir:

Re: Definition of "Eligible Amount" in paragraph (d) of subsection 146.01(1)

This is in reply to your letter of October 15, 1996, in which you ask for our views concerning an interpretation of the above-noted provision in the Income Tax Act (the "Act") as it relates to an actual fact situation.

We are unable to provide an opinion which is binding on the Department with respect to an actual fact situation except in the context of an advance income tax ruling. We can, however, offer the following general comments.

Firstly, in our view an individual "acquires" either alone or jointly a qualifying home within the meaning of paragraph (c) of the definition of "eligible amount" in subsection 146.01(1) of the Act at the time legal title passes to the individual. Generally, this is the time at which the deed or transfer to the property is registered at the land titles or land registry office. (Note: There is a special rule with respect to the acquisition of a condominium unit contained in paragraph 146.01(2)(b) of the Act.) Entering into an agreement of purchase and sale (which is a transaction separately described in paragraph (b) of the aforementioned definition) does not result in an acquisition of the home for purposes of section 146.01 of the Act.

With respect to the substance of your query, you refer to an individual who sells an owner-occupied home on or before December 31, 1988, and neither he nor his spouse have an owner-occupied home from the period commencing January 1, 1989 until 31 days before the date, in 1996, the amount is to be withdrawn from the registered retirement savings plan to acquire a qualifying home. You ask whether the amount withdrawn is disqualified from being an "eligible amount" by virtue of paragraph (d) of the definition by reason solely of the fact that the individual and his spouse acquire the home previously owned in 1988 and therefore could be considered to have "acquired the qualifying home more than 30 days before" the date of withdrawal.

It is our view that the reference to "qualifying home" in paragraph (d) of the definition of "eligible amount" refers to the home to be acquired and not to the owner-occupied home previously owned, even though the homes are one and the same. In other words, although the home owned in 1988 is a home that was "acquired more than 30 days before" the amount is withdrawn, it is not the "qualifying home" that, as required in paragraph (b) of the definition of "eligible amount", is the subject of the agreement of purchase and sale.

We trust our comments will be of assistance to you.

Yours truly,

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