Principal Issues: Whether an individual can claim the First-Time Home Buyers' Tax Credit if he or she owned a home located outside Canada that he or she occupied in the four-year period referred to in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118.05(1).
Position: No.
Reasons: An individual is considered to be a owner a home that he or she occupied in the four-year period referred to in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118.05(1) if he or she owns the home, whether located in Canada or outside Canada, that he or she occupied in this period as his or her principal place of residence.
XXXXXXXXXX 2021-088574 Marie Lamarche, M. Fisc.
December 31, 2024
Dear XXXXXXXXXX,
Subject: First-Time Home Buyers’ Tax Credit (“FTHBTC")
This letter is in response to your email dated March 8, 2021, in which you asked whether an individual can claim the FTHBTC if the individual owned a home outside Canada and occupied it during the four-year period referred to in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118. 05(1) of the Income Tax Act (the “Act”).
All legislative references in this document are to provisions of the Act.
Our Comments
This technical interpretation provides general comments about the provisions of the Act and related legislation. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC70-6R12, Advance Income Tax Rulings and Technical Interpretations.
Subsection 118.05(3) provides for a deductible credit in computing the tax payable by an individual for a taxation year in which a qualifying home in respect of the individual is acquired. Subsection 118.05(1) defines a “qualifying home” to include a dwelling located in Canada that was acquired jointly or otherwise after January 27, 2009, and that, if the home is not acquired by the individual for the benefit of a specified person, meets all the conditions set out in paragraph (a) of that definition. Subparagraph (a)(i) of the definition of “qualifying home” in subsection 118.05(1) provides that the individual must intend to inhabit the home as a principal place of residence not later than one year after its acquisition.
Subparagraph (a)(ii) of the same definition provides that the individual must not have owned, whether jointly or otherwise, a home that was occupied by the individual in the period that began at the beginning of the fourth preceding calendar year that ended before the acquisition, and that ended on the day before the acquisition.
Subparagraph (a)(iii) of the same definition provides, among other things, that the individual’s spouse or common-law partner must not have, in the same period, have owned, whether jointly or otherwise, a home that was inhabited by the individual during the marriage to or common-law partnership with the individual. The CRA is of the view that if the individual did not have a spouse or common-law partner at the time of acquisition, this condition does not apply.
Whether an individual owned a home that the individual occupied for the purposes of subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118.05(1) is a question of fact that can only be resolved after a review of all the relevant facts.
However, we are of the opinion that an individual owned a home that he inhabited during the four-year period referred to in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118. 05(1) if he owned the home he inhabited during that period as his principal place of residence. The fact that the home is located outside Canada does not affect this opinion.
The CRA issued the following comment on the term “principal place of residence” in Income Tax Technical News No. 31R2, which we published on May 16, 2006 (footnote 1):
An individual's “principal place of residence” is the place where the individual regularly, normally or customarily lives. In our view, the place where the individual normally sleeps is a significant factor in making this determination. Other significant factors include the location of the individual's belongings, where the individual receives his or her mail, and where the individual's immediate family, including the individual's spouse or common-law partner and children, reside.
Consequently, we are of the view that an individual does not meet the condition set out in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118.05(1) if the individual owned a home, located in Canada or outside Canada, that he inhabited as his principal place of residence in the four-year period referred to in subparagraph (a)(ii) of the definition of “qualifying home” in subsection 118.05(1).
Best regards,
Isabelle Landry
Section Manager
for the Acting Division Director
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
FOOTNOTES
Due to our system requirements, the footnotes contained in the original document are reproduced below:
1 You will find that Income Tax Technical News on our website at the following address: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/itnews-31r2.html