What is the First Home Savings Account (FHSA)?
Introducing the First Home Savings Account (FHSA) for Canadian first-time homebuyers. This specialized account empowers you to save for your down payment while enjoying the benefit of tax-free interest earnings. Withdrawals from the account are also tax-free.
By eliminating taxation on your contributions, the FHSA offers the potential for faster growth compared to traditional savings accounts.
Key details on creating an FHSA:
- Eligibility: This savings account is available to Canadian residents aged 18 and above.
- First-time homebuyer qualification: To be eligible, you and your spouse or common-law partner must not have owned a home that you lived in during the year you open the account or in the past four years.
- Tax-free contributions: You can contribute to the account tax-free for up to 15 years.
- Contribution limits: The maximum annual contribution is $8,000, and you can utilize up to $8,000 of your unused contribution room from previous years.
- Lifetime contribution limit: The FHSA has a lifetime contribution limit of $40,000.
- Stay on track with automatic contributions: Setting up automatic contributions is an effective way to ensure you stay aligned with your savings goals.
What else to consider?
Additionally, consider the synergy of the First Home Savings Account (FHSA) with the Home Buyers’ Plan (HBP). The HBP enables you to withdraw up to $35,000 from your registered retirement savings plans (RRSP) for purchasing a home. Keep in mind that repayment of the withdrawn amount is required within 15 years to your RRSP, pooled registered pension plans (PRPP), or specified pension plans (SPP).
Next steps
Take the next steps toward your homebuying journey. For inquiries, please don’t hesitate to contact me at 647-883-7790 or via email at jag@dlcchoice.ca!
If you are interested in completing a mortgage application, click here. |
