# RRSP home purchase plan: Cottage becoming a house



## Taxsaver (Jun 7, 2009)

Hello. I've just bought a cottage in my hometown. Please bear with my English now. Since the cottage is seasonal and is not immobilized in the ground (it is supported on cement and wood blocks), I can't use the Home Purchase Plan with my RRSP since it's not a house. Not yet... I will have people installing beams (?) underneath into the ground so it becomes a house. At that time, I was told by the bank that I could re-negociate a better mortgage plan. My question is: Will be able to use the house buying plan with my RRSP when the cottage has become a house? Thanks.


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## Charlie (May 20, 2011)

Do you intend the cottage to be your principal place of residence? (will you live there 50% + of the time). If not, you may be out of luck.

BTW, a mobile home qualifies, as does a home to be built. As long as you've a contract to build or buy it -- and move in within a yr.

Here's the CRA info: http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-10e.pdf

The definition of qualifying home for HBP is different then that used by banks to qualify you for a residential mortgage. So your cottage may qualify for HBP but not (yet) for residential financing. This sometimes happens when the land/house values are out of whack for the bank's ratios - but the home otherwise meets the HBP definitions or in situations such as you mentioned where the home is not secured on the land.


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## Taxsaver (Jun 7, 2009)

Charlie said:


> Do you intend the cottage to be your principal place of residence? (will you live there 50% + of the time). If not, you may be out of luck.
> 
> BTW, a mobile home qualifies, as does a home to be built. As long as you've a contract to build or buy it -- and move in within a yr.
> 
> ...


Hi Charlie. Thanks for the info. I'm reading the document right now. I'm re-reading the bank person's email... She says I don't qualify, not because the reason I cited, but because it is not my principal place of residence. That's a question you asked. Well, no. I will not be moving in it within a year. Only in 2014 or 2015.

I have only $6,500 in RRSP, so it's not that big of a deal. 

Now, let's say I sell my house in 2016 and buy another one. Will I qualify then as first-time home buyer? I think this paragraph applies to me, but I'm not sure it means exactly. Can you help me, please?

"First-time home buyer – If, during the period beginning
January 1 of the fourth year before the year of the
withdrawal and ending 31 days before the withdrawal,
neither you nor your spouse or common-law partner
owned a home that you occupied as your principal place
of residence, you may be able to participate in the HBP.
For example, if in 2005 you sold the home you previously
lived in, you may be able to participate in 2010. Or if you
sold the home in 2006, you may be able to participate in
2011."


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## Charlie (May 20, 2011)

If you sell in 2016 and have lived in the home as your principal place of residence you could qualify again in 2021 per my understanding. Unless they change the rules.


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## Taxsaver (Jun 7, 2009)

Charlie said:


> If you sell in 2016 and have lived in the home as your principal place of residence you could qualify again in 2021 per my understanding. Unless they change the rules.


You've got it, Charlie.

So isn't "first-time" buyer a bit misleading?


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