Principal Issues: 1. Can two people purchase an otherwise qualifying home under the Home Buyers Tax Credit (HBTC) and each claim the HBTC or will they share the tax credit?
2. Does a fourplex with a Bachelor [apartment] qualify as a qualifying home for the HBTC?
Position: 1. Depends 2. A question of Fact
Reasons: Legislation
XXXXXXXXXX
2011-039431
George A. Robertson, CMA April 5, 2011
Dear XXXXXXXXXX :
Re: First-time Home Buyers Tax Credit (HBTC)
This is in response to your request of January 31, 2011 concerning the HBTC, specifically;
- If two people purchase an otherwise qualifying home for the HBTC, will each claim the HBTC or will they share the tax credit?
- Will a fourplex with a Bachelor [apartment] qualify as a qualifying home for the HBTC?
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 Rulings, 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 (TSO). A list of TSOs is available on the "contact us" page of CRA's website. We are however, prepared to provide the following general comments, which may be of assistance.
Our comments
Subsection 118.05(4) of the Income Tax Act (the Act), relating to the HBTC, states,
If more than one individual is entitled to a deduction under this section for a taxation year in respect of a particular qualifying home, the total of all amounts so deductible shall not exceed the maximum amount that would be so deductible for the year by any one of those individuals in respect of the qualifying home, if that individual were the only individual entitled to deduct an amount for the year under this section, and if the individuals cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.
Therefore, the claim for the HBTC can be split among an individual and the individual's spouse or common-law partner, but the combined total cannot exceed $5,000.
A qualifying home must be registered in the individual's and/or the individual spouse's or common-law partner's name in accordance with the applicable land registration system, and must be located in Canada. It includes existing homes and homes under construction. The following are considered qualifying homes:
- single-family houses;
- semi-detached houses;
- townhouses;
- mobile homes;
- condominium units; and
- apartments in duplexes, triplexes, fourplexes, or apartment buildings.
It is the apartment that is owned by the individual and/or the individual's spouse or common-law partner and not the duplex, triplex, fourplex or apartment building that would be a qualifying home for the HBTC.
For more information on the HBTC, please refer to our website at http://www.cra-arc.gc.ca/nwsrm/fctshts/2010/m01/fs100121-eng.html.
While we trust that these comments will be of assistance, they are given in accordance with the practice referred to in paragraph 22 of IC 70-6R5 and are not binding on the CRA in respect of any particular situation.
Yours truly,
Sharmini Ratnasingham
Assistant Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch