Section 118.05

Subsection 118.05(1)

Qualifying Home

Administrative Policy

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.8, 2016-0674851C6 F - HBTC - Acquisition by way of gift

gifted home can qualify for the HBTC

An individual received a gift of a home from the individual’s parents. Would this acquisition by gift rather than purchase preclude deduction of the first-time home buyer’s credit (HBTC). CRA responded:

The CRA is of the view that the acquisition of a qualifying home by way of gift is a valid acquisition for the purposes of the HBTC. Consequently, subject to compliance with all the other conditions of section 118.05, the mere fact of acquiring a home by way of gift does not in itself prevent an individual from applying for the HBTC.

26 July 2010 External T.I. 2010-0368991E5 F - CIAPH - Société de personnes

partner is not precluded from claiming HBTC for residence acquired by partnership

In the 1st situation, partnership between two spouses acquired a farm including a residence after January 27, 2009. Would either spouse be able to claim the HBTC or share it between them?

In the 2nd situation, a partnership between two spouses and their adult son and which owned a residence which was exclusively occupied by the two spouses, build a second residence after January 27, 2009 which was exclusively occupied by their son as his first residence. Can he claim the HBTC?

CRA responded:

[W]e accept, under an administrative position applicable for purposes of the HBTC (similar to those taken for purposes of calculating the gain on the disposition of a principal residence and the Home Renovation Tax Credit), that a member of a partnership may be able to claim the HBTC in certain situations even though the member is not the legal purchaser of the home.

By virtue of this administrative position, a partner could be considered the acquiror of the home for purposes of the HBTC and thus claim the HBTC if the member of the partnership is an individual, the home qualifies as a principal residence as defined in section 54 to the individual, and all of the conditions for the HBTC are otherwise satisfied as if the partner had personally acquired the home. ….

[This] position could apply in the two hypothetical situations … .

Paragraph (a)

Administrative Policy

11 October 2019 APFF Financial Strategies and Instruments Roundtable Q. 2, 2019-0811881C6 F - HBP/HBTC - Death of a spouse

widow who had resided in the home of her deceased husband could access the first-time home buyer’s credit

Monsieur had predeceased Madame, aged 58, three months before her purchase of a condo in July 2019, using funds withdrawn from her RRSP. Monsieur had been the sole owner of their home until his death, with the home then held by the estate before its sale. Is Madam eligible for the first-time home buyer’s credit (FHBTC)? CRA stated:

[S]ince Madame did not have a spouse or common-law partner at the time of acquisition of the home, the condition in subparagraph (a)(iii) of the definition "qualifying home" in subsection 118.05(1) is not applicable. Furthermore, since she was not the owner-occupant of a home during the period starting on January 1, 2015 and ending the day before the acquisition, we are of the view that the condition in subparagraph (a)(ii) of the definition of "qualifying home" in subsection 118.05(1) is respected. Thus, the home acquired in July 2019 could, if all the other conditions … are otherwise satisfied, qualify as a "qualifying home" for the purposes of the FHBTC.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146.01 - Subsection 146.01(1) - Regular Eligible Amount - Paragraph (f) widow who had resided in the home of her deceased husband could access the HBP program to purchase a condo or acquire his home from estate 231

19 May 2010 External T.I. 2010-0357071E5 F - Crédit d'impôt pour l'achat d'une 1e habitation

allocation of credit between 2 qualifying spouses

An individual (with no previous relevant ownership) bought the individual’s home in July 2009 in co-ownership with a new spouse, this home was their principal place of residence, the new spouse had never owned another home, and on December 31, 2009, CRA confirmed that spouse could claim the HBTC if the spouse satisfied all the conditions of application, stating:.

However, where more than one individual is entitled to claim the HBTC in respect of a qualifying home, the HBTC may in that case be claimed by, or shared between, any of the individuals. However, the total amount of the credit claimed by all individuals combined cannot exceed $750.

Conversely:

[W]here only one of the spouses or common-law partners satisfies all the conditions for claiming the HBTC, only the qualifying spouse or common-law partner could claim the HBTC, regardless of the fact that the other spouse or common-law partner could not.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(iii) ownership by common-law partner of their home not relevant if they separated before individual’s acquisition of another principal residence 62
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(ii) ownership of secondary residence does not disqualify for HBTC 75
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(i) given future intention test, there can be a gap between purchase and home becoming principal residence 187

Subparagraph (a)(i)

Administrative Policy

19 May 2010 External T.I. 2010-0357071E5 F - Crédit d'impôt pour l'achat d'une 1e habitation

given future intention test, there can be a gap between purchase and home becoming principal residence

Can an individual otherwise satisfying the conditions claim the HBTC if the individual acquired a residence on December 15, 2009, but did not live in it before February 1, 2010 (and may have renovated it during that period) – and can there be a gap between the time of the home’s purchase and it becoming the individual’s principal place of residence? CRA responded:

The taxation year in which the credit is deductible in calculating an individual's tax depends on the date of acquisition of the home, which generally corresponds to the date of purchase of the residence. Renovating a home after its acquisition or moving into it within a few weeks of its acquisition generally does not change the time at which the HBTC can be deducted in computing an individual's tax.

There could be a delay between the date of acquisition and the date the residence becomes the individual's principal place of residence. The HBTC legislation only requires that the individual's intention is to make it the individual’s principal place of residence no later than one year after the acquisition.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(iii) ownership by common-law partner of their home not relevant if they separated before individual’s acquisition of another principal residence 62
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) allocation of credit between 2 qualifying spouses 160
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(ii) ownership of secondary residence does not disqualify for HBTC 75

Subparagraph (a)(ii)

Administrative Policy

19 May 2010 External T.I. 2010-0357071E5 F - Crédit d'impôt pour l'achat d'une 1e habitation

ownership of secondary residence does not disqualify for HBTC

Could the HBTC be claimed for an individual’s purchase of a home in July 2009 that would be the individual’s principal place of residence where the individual already owns a home that is not the individual’s principal place of residence? CRA responded:

[W]here a home is not occupied as a principal place of residence … ownership of that residence does not disqualify the individual from the HBTC.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(iii) ownership by common-law partner of their home not relevant if they separated before individual’s acquisition of another principal residence 62
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) allocation of credit between 2 qualifying spouses 160
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(i) given future intention test, there can be a gap between purchase and home becoming principal residence 187

Subparagraph (a)(iii)

Administrative Policy

19 May 2010 External T.I. 2010-0357071E5 F - Crédit d'impôt pour l'achat d'une 1e habitation

ownership by common-law partner of their home not relevant if they separated before individual’s acquisition of another principal residence

An individual could claim the HBTC for a home bought in July 2009, one year after separation from a common-law spouse who had owned the home which had been their principal residence (with the individual renting accommodation between the separation and such purchase), given that “an individual's common-law partner is taken into account only at the time the home is acquired.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) allocation of credit between 2 qualifying spouses 160
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(ii) ownership of secondary residence does not disqualify for HBTC 75
Tax Topics - Income Tax Act - Section 118.05 - Subsection 118.05(1) - Qualifying Home - Paragraph (a) - Subparagraph (a)(i) given future intention test, there can be a gap between purchase and home becoming principal residence 187

Subsection 118.05(3)

Administrative Policy

2 April 2013 External T.I. 2013-0478221E5 F - CIAPH - acquisition pour une somme nominale

purchase for nominal consideration still generates the credit

Can the first-time home buyers' tax credit ("HBTC") be claimed where the taxpayer buys a house for the sum of a dollar? CRA responded:

[T]he acquisition of a qualifying home for the sum of one dollar is an acquisition for the purposes of the HBTC. Consequently, subject to satisfying all the other conditions of section 118.05, the mere fact of acquiring a home for a dollar does not by itself prevent an individual from claiming the HBTC.