CRA finds that reimbursements received under the first-time home buyer incentive program were not income

As a result of changes to the first-time home buyer incentive (“FTHBI”) program, first-time homebuyers - who had been required to pay to the federal government, on the subsequent sale of their home, part of the appreciation in the home’s value as a return to the government on its contribution towards part of their down payment on the home purchase - received a refund of a portion of such payments as a result of the government retroactively limiting its return to 8% per annum.

CRA found that these refunds were not income to the home sellers because they were essentially amounts received as “a reimbursement of a borrowing cost incurred with respect to the purchase of the homebuyer’s personal residence.” CRA also indicated that the amounts should not be regarded as adjustments to the proceeds of disposition that had been received on the home sales.

Neal Armstrong. Summary of 10 November 2022 External T.I. 2022-0932331E5 under s. 3(a).