In the 2022 Budget, the Government of Canada proposed the introduction of the Tax-Free First Home Savings Account (FHSA), a new registered plan to help Canadians save towards their first home by allowing account holders to contribute up to $40,000 over the lifetime of the plan
The plan is set to launch in April 2023. All contributions the Tax-Free First Home Savings Account will be applied to the 2023 tax year and filing in 2024.
An FHSA combines the features of a Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA) . Like an RRSP, contributions would be tax-deductible and qualifying withdrawals to purchase a first home would be non-taxable1, like a TFSA.
However, with an FHSA and unlike the Home Buyers’ Plan, the funds do not need to be paid back.
The home buyer can use the funds for down payment on a home with a purchase contract or a new build within 12 months of the withdrawal of the funds from the FHSA.
Rules apply if the funds are not used for the purchase of a home or if the home is not occupied by the buyer.
The Tax-Free First Home Savings Account is a great opportunity for first-time home buyers to invest their savings within any investment account while saving on income tax in the year of the deposit!
Not all banks and credit unions have the Tax-Free First Home Savings program set up quite yet. However, it is not too early to talk with your independent mortgage planner to get ready and talk about your specific situation.
Call me anytime — 604-813-8402 or email pauline@mybcmortgage.ca