Making the Most of the Tax-Free First Home Savings Account 

With the newly announced Tax-Free First Home Savings Account (FHSA), Canadian first-time homebuyers between the ages of 18 to 71 can now save up to $40,000 toward a down payment on their first home. The FHSA is similar to a Registered Retirement Savings Plan (RRSP) in that contributions to the account are tax-deductible and income from investments is received on a tax free-basis. Withdrawals from the account are tax-free if the funds are used to purchase a first home. 

Annual contributions of up to $8,000 can be made to an FHSA, subject to a lifetime maximum of $40,000. As the FHSA can stay open for a maximum of 15 years, funds in the account are able to be invested and compound tax-free for an extended period. If a home is not purchased after the 15 year period, the amount in the FHSA can be transferred into an RRSP or RRIF with no tax consequences.

FHSA accounts become active in 2023. If you are interested in learning about how this opportunity can benefit you and your family, please contact us for more information.