This is a multi-part message in MIME format. ---------------------- multipart/alternative attachment My question is: Canadian-specific QUESTION: My son and daughter in law are proceeding towards a divorce. = They currently are joint owners of their first home. She intends to buy = out his interest and my son wants to purchase a place of his own. Can he = take funds from his RRSP, to cover the downpayment, without paying tax. -------------------------------------------------------------------------= -- david ingram replies: The answer is no! I have included the government's own words from the Home Buyer's Guide: = Go to the section that defines a first time buyer You can find the whole pamphlet at: = http://www.ccra-adrc.gc.ca/E/pub/tg/rc4135/rc4135eq.html#P286_14687 Home Buyers' Plan (HBP) RC4135(E) Rev. 01 -------------------------------------------------------------------------= - Visually impaired persons can order publications in braille or = large print, or on audio cassette or computer diskette, by calling = 1-800-267-1267 weekdays from 8:15 a.m. to 5:00 p.m. (Eastern Time). La version fran=E7aise de cette publication est intitul=E9e = R=E9gime d'accession =E0 la propri=E9t=E9 (RAP). This document is also available for download in other formats. -------------------------------------------------------------------------= - Table of Contents a.. Your opinion counts!=20 b.. Before You Start=20 a.. Is this guide for you?=20 b.. What is the HBP?=20 c.. Do you need more information?=20 d.. Forms and Publications=20 e.. Internet access=20 c.. Glossary=20 d.. Chapter 1 - Participating in the HBP=20 a.. What is the HBP?=20 a.. Can a withdrawal be made from any RRSP?=20 b.. What are the conditions for participating in the HBP?=20 a.. You have to enter into a written agreement to buy or = build a qualifying home=20 b.. You have to intend to occupy the qualifying home as your = principal place of residence=20 c.. You have to be considered a first-time home buyer=20 d.. Your HBP balance on January 1 of the year of withdrawal = has to be zero=20 e.. Neither you nor your spouse or common-law partner can = own the qualifying home more than 30 days before the withdrawal=20 f.. You have to be a resident of Canada=20 g.. You have to complete Form T1036=20 h.. You have to receive all withdrawals in the same year=20 i.. You cannot withdraw more than $20,000=20 j.. You have to buy or build the qualifying home before = October 1 of the year after the year of withdrawal=20 k.. How do you make an HBP withdrawal?=20 l.. You have to file a tax return=20 e.. Chapter 2 - Repaying your withdrawals=20 a.. How do you make your repayments?=20 b.. What happens if you choose to begin your repayments = earlier?=20 c.. What happens if you repay more than the amount you have to = repay?=20 d.. What happens if you repay less than the amount you have to = repay?=20 e.. Situations where the repayments have to be made in less = than 15 years=20 a.. If the participant dies=20 b.. If you become a non-resident=20 c.. If you are 70 years of age or over=20 f.. Chapter 3 - Other rules you should know=20 a.. What happens if you do not meet all the HBP conditions?=20 a.. Cancelling your participation=20 b.. If you cannot participate in the year, can you participate = in a later year?=20 c.. Can you use funds withdrawn under the HBP for other = purposes?=20 d.. Can you participate in the Lifelong Learning Plan (LLP) at = the same time?=20 -------------------------------------------------------------------------= - Your opinion counts! We review our income tax guides and pamphlets each year. If you = have any comments or suggestions to help us improve our publications, = we'd like to hear from you! Please send your comments to: Client Services Directorate Canada Customs and Revenue Agency Place Vanier - Tower A Ottawa ON K1A 0L5 -------------------------------------------------------------------------= - Before You Start Is this guide for you? Use this guide if you want information about the rules that apply = to the Home Buyers' Plan (HBP). What is the HBP? The HBP is a program that allows you to withdraw up to $20,000 = from your registered retirement savings plans (RRSPs) to buy or build a = qualifying home. Withdrawals that meet all applicable HBP conditions do = not have to be included in your income, and your RRSP issuer will not = withhold tax on these amounts. If you buy the qualifying home together = with your spouse or common-law partner, or other individuals, each of = you can withdraw up to $20,000. Under the HBP, you have to repay all withdrawals to your RRSPs = within a period of no more than 15 years. Generally, you will have to = repay an amount to your RRSPs each year until you have repaid all the = amount you withdrew. If you do not repay the amount due for a year, it = will be included in your income for that year. Do you need more information? In this guide, we use plain language to explain the most common = income tax situations. If you need more information after reading this = guide, contact the General Enquiries section of your tax services = office. You can find the address and telephone numbers in the government = section of your telephone book. They are also available on our Web site = under the heading "Contact us" at www.ccra.gc.ca. Forms and Publications Throughout the guide, we refer to other forms and publications. = You can get these documents from any tax services office or tax centre, = or by calling us toll free at 1-800-959-2221. Internet access You can find most of our publications at www.ccra.gc.ca on the = Internet. Glossary This glossary gives you a general description of the technical = terms that we use in this guide. Common-law partner - This refers to a person of the opposite or = the same sex who is not your spouse (see the definition of spouse on the = next page) when you live and have a relationship with that person. In = addition, at least one of the following has to apply. He or she: a.. is the natural or adoptive parent (legal or in fact) of your = child;=20 b.. has been living and having a relationship with you for at = least 12 continuous months; or=20 c.. lived with you previously as your spouse for at least 12 = continuous months. The above includes any period that you were separated for less = than 90 days because of a breakdown in the relationship. Disabled person - For purposes of the HBP, a disabled person = includes you or a person related to you by blood, marriage, or adoption, = if you or the related person are entitled to the disability amount for = the year of the HBP withdrawal. A related disabled person does not have = to reside with you in the same home. We consider a person to be entitled to the disability amount if = one of the following situations applies: a.. the person was entitled to the disability amount on line 316 = of the person's return for the year before the HBP withdrawal, and still = meets the eligibility requirements for the disability amount when the = HBP withdrawal is made; or=20 b.. if the person was not entitled to the disability amount for = any year before the HBP withdrawal, a Form T2201, Disability Tax Credit = Certificate, that a medical doctor or appropriate medical practitioner = (i.e., an optometrist, audiologist, psychologist, or occupational = therapist) has certified, is filed for the person for the year of the = HBP withdrawal. If Form T2201 is not approved, your withdrawals will not = be considered eligible withdrawals under the HBP and they will have to = be included in income for the year. If all other eligibility requirements are met, we consider a = person to be entitled to the disability amount even if costs for an = attendant or for care in a nursing home were claimed as a medical = expense by or on behalf of that person. Eligible withdrawal - This is an amount you withdraw from your = RRSP that meets all HBP conditions that apply to your situation. HBP balance - When you withdraw funds from your RRSPs under the = HBP, you create an HBP balance. Your HBP balance at any time is the = total of all eligible withdrawals you made from your RRSPs minus the = total of all amounts you designated as an HBP repayment and the amounts = included in your income (because they were not repaid to your RRSPs), in = previous years. Participant - You are considered an HBP participant if: a.. you make an eligible withdrawal from your RRSP to buy or = build a qualifying home for yourself;=20 b.. for 1999 and future years, you make an eligible withdrawal = from your RRSP under the HBP to buy or build a qualifying home for a = related disabled person or to help such a person buy or build a = qualifying home; or=20 c.. you are the spouse or common-law partner of a deceased HBP = participant and you elected to continue making the repayments for the = deceased participant. Participation period - Your HBP participation period starts on = January 1 of the year you receive an eligible withdrawal from your RRSP = and ends in the year your HBP balance is zero. Qualifying home - A qualifying home is a housing unit located in = Canada. This includes existing homes and those being constructed. = Single-family homes, semi-detached homes, townhouses, mobile homes, = condominium units, and apartments in duplexes, triplexes, fourplexes, or = apartment buildings, all qualify. A share in a co-operative housing = corporation that entitles you to possess, and gives you an equity = interest in, a housing unit located in Canada also qualifies. However, a = share that only provides you with a right to tenancy in the housing unit = does not qualify. RRSP deduction limit - This refers to the maximum amount you can = deduct for contributions you made to your RRSP or to your spouse's or = common-law partner's RRSP. Spouse - You have a spouse when you are legally married. You still = have a spouse if you are living apart for reasons other than a breakdown = of your relationship. Chapter 1 - Participating in the HBP What is the HBP? The HBP is a program that allows you to withdraw up to $20,000 = from your registered retirement savings plans (RRSPs) to buy or build a = qualifying home. The home can be for yourself or it can be for a related = disabled person if one or both of the following applies: a.. it is more accessible to that person than his or her current = home; or=20 b.. it is better suited to that person's needs. You can acquire the home for the disabled person, or you can = provide the withdrawn funds to the disabled person to acquire the home. You do not have to include eligible withdrawals in your income, = and your RRSP issuer will not withhold tax on these amounts. You can = withdraw a single amount or make a series of withdrawals throughout the = same year, provided the total of your withdrawals is not more than = $20,000. If you buy the qualifying home together with your spouse or = common-law partner, or other individuals, each of you can withdraw up to = $20,000. You have to repay all withdrawals to your RRSPs within a period of = no more than 15 years. Generally, you will have to repay an amount to = your RRSPs each year until you have repaid all the amount you withdrew. = If you do not repay the amount due for a year, it will be included in = your income for that year. Can a withdrawal be made from any RRSP? You can only withdraw funds from an RRSP under which you (the = participant) are the annuitant. If your spouse or common-law partner = contributed to your RRSP, you are the annuitant of the RRSP, even if = your spouse or common-law partner deducted the contributions from = taxable income. If you contributed to your spouse's or common-law = partner's RRSP, that individual is the annuitant of the RRSP, even if = you have deducted the contributions from your income. Some RRSPs, such as locked-in or group RRSPs, do not allow you to = withdraw funds from them. Your RRSP issuer can give you more information = about the types of RRSPs that you have and whether or not withdrawals = under the HBP can be made from them. Note If you withdraw an amount from an RRSP to which you made a = contribution during the 89-day period just before your withdrawal, you = might not be able to deduct the contribution you made. For more = information, see "How do you make an HBP withdrawal?". What are the conditions for participating in the HBP? A number of conditions have to be met to participate in the HBP. = While some conditions have to be met before you can withdraw funds from = your RRSPs, others apply when or after you receive the funds. If you participate in the HBP, you have to meet all the HBP = conditions yourself. However, depending on your situation, some = conditions may have to be met by another person. For example, if you = withdraw funds from your RRSPs to help a related disabled person buy or = build a qualifying home, some conditions have to be met by that person. Regardless of the situation, you are responsible for making sure = that all HBP conditions are met. If at any time during your = participation period a condition is not met, your withdrawal will not be = considered an eligible withdrawal and it will have to be included in = income for the year you received it. The following chart lists all the HBP conditions and who has to = meet them in different situations. We explain each condition in greater = detail in the pages that follow the chart. Conditions for participating in the HBP =20 Situation 1 - You buy or build a qualifying home for = yourself. Situation 2 - You, a disabled person, buy or build a = qualifying home for yourself. Situation 3 - You buy or build a qualifying home for a = related disabled person. Situation 4 - You help a related disabled person buy = or build a qualifying home. =20 Situation 1 2 3 4 =20 Person responsible for meeting the HBP conditions =20 You =20 You =20 You Related disabled person =20 You Related disabled person =20 Conditions you have to meet before applying to = withdraw funds under the HBP =20 You have to enter into a written agreement to buy or = build a qualifying home. =20 4 =20 4 =20 4 =20 N/A =20 N/A =20 4 =20 You have to intend to occupy the qualifying home as = your principal place of residence. =20 4 =20 4 =20 N/A =20 4 =20 N/A =20 4 =20 You have to be considered a first-time home buyer. 4=20 N/A N/A N/A N/A N/A =20 Your HBP balance on January 1 of the year of = withdrawal has to be zero. =20 4 =20 4 =20 4 =20 N/A =20 4 =20 N/A =20 Conditions you have to meet when a withdrawal is made =20 Neither you nor your spouse or common-law partner can = own the qualifying home more than 30 days before a withdrawal is made. =20 4 =20 4 =20 4 =20 N/A =20 N/A =20 4 =20 You have to be a resident of Canada. 4 4 4 N/A 4 N/A =20 You have to complete Form T1036. 4 4 4 N/A 4 N/A =20 You have to receive all withdrawals in the same year. 4 4 4 N/A 4 N/A =20 You cannot withdraw more than $20,000. 4 4 4 N/A 4 N/A =20 Condition you have to meet after all your withdrawals = have been made =20 You have to buy or build the qualifying home before=20 October 1 of the year after the year of withdrawal. =20 4 =20 4 =20 4 =20 N/A =20 N/A =20 4 =20 =20 You have to enter into a written agreement to buy or build a = qualifying home To withdraw funds from your RRSPs under the HBP, you must first = have entered into a written agreement to buy or build a qualifying home. = Obtaining a preapproved mortgage does not satisfy this condition. Note If you are withdrawing funds from your RRSPs to help a related = disabled person to buy or build a qualifying home, that person must meet = this condition. When you withdraw funds from your RRSPs under the HBP, you have to = intend to occupy the qualifying home as your principal place of = residence no later than one year after buying or building it. Once you = occupy the home, there is no minimum period of time that you have to = live there. In some cases, you may not occupy the qualifying home by the end = of the 12-month period after you bought or built it. If this happens to = you, we still consider you a participant in the HBP because you intended = to occupy the home as your principal place of residence no later than = one year after buying or building it. Note If you are withdrawing funds from your RRSPs to buy or build a = qualifying home for a related disabled person or to help a related = disabled person to buy or build a qualifying home, that person must meet = this condition. You have to be considered a first-time home buyer Generally, before you can withdraw funds from your RRSPs to buy or = build a qualifying home, you have to meet the first-time home buyer's = condition. You are not considered a first-time home buyer if, at any time = during the period beginning January 1 of the fourth year before the year = of withdrawal and ending 31 days before your withdrawal, you or your = spouse or common-law partner owned a home that you occupied as your = principal place of residence. Example 1 You want to participate in the HBP in 2002. To be considered a = first-time home buyer, you or your spouse or common-law partner cannot = have owned and occupied a home as your principal place of residence at = any time during the period beginning January 1, 1998, and ending 31 days = before your withdrawal in 2002. In this section, the word "home" has the same meaning as the term = "qualifying home". Note You must meet the first-time home buyer's condition at the time = you withdraw an amount from your RRSPs under the HBP. If you are not = considered a first-time home buyer when you withdraw an amount, that = amount will have to be included in your income. To determine if you are considered a first-time home buyer, = complete the following questionnaire: Are you considered a first-time home buyer? Question 1 - Did you, at any time during the period = beginning January 1 of the fourth year before the year of withdrawal and = ending 31 days before the withdrawal, own a home that you occupied as = your principal place of residence? Yes [__] You are not considered a first-time home buyer. =20 No [__] Go to question 2. =20 Question 2 - Do you have a spouse or common-law partner? Yes [__] Go to question 3. =20 No [__] You are considered a first-time home buyer. =20 Question 3 - Did your spouse or common-law partner have an = owner-occupied home, at any time during the period beginning January 1 = of the fourth year before the year of withdrawal and ending 31 days = before the withdrawal, that you occupied with that individual while you = were living together as spouses or common-law partners? Yes [__] You are not considered a first-time home buyer. =20 No [__] You are considered a first-time home buyer. =20 If you cannot participate in the HBP in a year because you = do not meet this condition, see the section called "If you cannot = participate in the year, can you participate in a later year?". =20 If at the time of withdrawal you have a spouse or common-law = partner, it is possible that only one of you will be considered a = first-time home buyer. Exception to the first-time home buyer's condition -You do not = have to meet the first-time home buyer condition to participate in the = HBP if any of the following situations applies to you: a.. you are a disabled person and you withdraw funds from your = RRSPs under the HBP to acquire a home that is more accessible, or better = suited to your needs;=20 b.. you withdraw funds from your RRSPs under the HBP to acquire = a home for a disabled person related to you by blood, marriage, or = adoption, that is more accessible to, or better suited to the needs of, = that person; or=20 c.. you withdraw funds from your RRSPs under the HBP and give = those funds to a disabled person related to you by blood, marriage, or = adoption, to acquire a home that is more accessible to, or better suited = to the needs of, that person. =20 ---------------------- multipart/alternative attachment An HTML attachment was scrubbed... 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