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FHSA - First Home Savings Account

Saving for a down payment on a home can be a daunting task, but the Canadian government offers several incentives to encourage individuals to save for their first-time home purchase. One such incentive is the First Home Savings Account (FHSA), which is a special savings account designed to help Canadians save for their first home. Those eligible to open FHSA may do so starting April 1, 2023.

FHSA is available to Canadian residents who are 18 years or older and who are first-time home buyers. Please note, according to canada.ca, a "first-time home buyer" for the purpose of opening an FHSA is different than a "first-time home buyer" for the purpose of making a qualifying withdrawal." The account can be opened at a financial institution that is authorized to offer the FHSA. With the FHSA, you can contribute up to $8,000 annually towards your home purchase and up to a lifetime limit of $40,000.

The account can be opened by an individual or jointly with a spouse or common-law partner. Contributions to an FHSA are tax-deductible, meaning you can reduce your taxable income by the amount you contribute. This is similar to an RRSP (Registered Retirement Savings Plan). However, unlike an RRSP, withdrawals from an FHSA are tax-free, like a TFSA (Tax-Free Savings Account). Once the account holder is ready to purchase their first home, they can withdraw funds from the account to be used towards the purchase of a qualifying home.

The FHSA is a great tool for Canadians who want to save for their first home purchase while also taking advantage of tax deductions and tax-free investment earnings. By opening an FHSA account, first-time home buyers can make a significant impact on their ability to save for their first home.

Are you looking to benefit from a First Home Savings Account? We encourage you to speak with an accountant before opening an account, making contributions, and/or withdrawing funds to avoid penalties. You may also learn more about this new program by visiting a dedicated page: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

If you would like to learn about home-financing and build a long-term strategy, register for a call with IK Financial mortgage agent - ikfinancial.com.

IK Financial Mortgage Team operates on behalf of Mortgage Edge. Lic#10680

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