The RRSP Home Buyers’ Plan (HBP), allows individuals to withdraw some of their RRSP funds to buy or build a qualifying home. Presently a person may access up to $25,000 for the HBP, with payback of the borrowed funds to the RRSP required within a 15-year time period following property occupancy.While there are many rules as to when and how to make use of the HBP, the threshold issue is whether the property under consideration actually constitutes a “housing unit” for the purposes of the program. The Canada Revenue Agency (CRA) issued a clarification letter in March 2013 revoking comments it had made in an earlier letter that purported to extend the definition to include a motor home.
Income Tax Folio S1-F3-C2: Principal Residence
A “mobile home” is among the list of property types in Folio section 2.7 that the CRA has accepted as a housing unit that can then qualify as a principal residence. A principal residence does not have to be in Canada.
(For those unfamiliar with Folios, in 2012 CRA began revising and consolidating its commentaries onto its website in the form of its Income Tax Folios. This Folio was published in early 2013, replacing Interpretation Bulletin 120-R6 Principal Residence.)
RC4135 Home Buyers’ Plan (HBP)
There are two components to the definition of a qualifying home in the CRA’s HBP Guide: what type of property is it, and where is it located?
As with the principal residence definition, it is likewise accepted that a mobile home may be a housing unit. But unlike a principal residence, a qualifying home for the HBP must be located in Canada.
2011-0423971E5 Home Buyers’ Plan – Qualifying home
This CRA letter is in response to a taxpayer inquiry as to whether a “motor home” would qualify for the HBP. It appears from the brief factual outline that the taxpayer intended to purchase a small motor home chosen or designed to accommodate a person with disability needs. The home would be driven south for the winter months, returning to Canada for the warmer months.
After referencing the foregoing definitions for a housing unit, the writer stated that “a motor home is a type of mobile home that is considered a housing unit.” [My emphasis added.] But based on the intended travel plans, in the CRA’s opinion it would not be located in Canada and therefore not qualify for the HBP.
The letter includes the standard lead phrase: “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.”
2013-0482291I7 Home Buyers’ Plan – Motor Home
This is an externally published memo between CRA departments regarding the above stated conclusion that a “mobile home” includes a “motor home.”
As there is no definition of either term in the Income Tax Act, resort is taken to the Concise Canadian Oxford Dictionary, which defines: a mobile home as “a large transportable structure equipped with living accommodations, permanently parked, and used as a residence”, and a motor home as “a large motor vehicle equipped as a self-contained home for camping or long trips.”
As a motor home is not affixed to land, it is viewed as a vehicle, and thus not eligible for the HBP. The interpretation on that point in the previous technical letter is thereby revoked – with apologies expressed for any confusion or misunderstanding caused.
Be reminded that technical letters issued by the CRA are not legally binding on courts, not legally binding upon the CRA itself, and are subject to revocation.
A non-vehicular mobile home remains qualified for the HBP.
A property that does not qualify for the HBP because it is outside Canada, may nonetheless qualify for the principal residence exemption.