Get to Know More About First Home Savings Account (FHSA)

Do you have any kids, family, or relatives who are currently renting and are struggling with a downpayment? Please forward this link so they can know more about the First Home Savings Account.

The good news is the government just launched a fun and strategic solution to help you build up their down payment.

Introducing the First Home Savings Account (FHSA)! It’s like a secret savings account for first-time buyers (FTBs) that lets you save up to $8,000 a year and up to $40,000 over their lifetime. And the best part? Contributions are tax-deductible so you can save some serious cash!

Plus, if you use their FHSA savings to buy a qualifying principal residence, you won’t have to pay taxes on the gains or withdrawals. It’s like a gift from the tax gods!

For example, if you earn $80,000 a year, deducting $8,000 from your taxes could save you anywhere from $2,200 to $3,000, depending on the province. That’s some serious savings!

Here are some good-to-know points that will help you make the most of this amazing opportunity:

1. Unlike the Home Buyers’ Plan (HBP), you don’t have to repay the funds they withdraw from your FHSA.
2. Even if you’re not a first-time buyer (FTB), you can still use the FHSA if you haven’t owned a home in the past four years.
3. If you use only some of your FHSA contribution room in a year, you can carry it over to the following year.
4. You have 15 years to apply your FHSA funds to a home purchase.
5. You can transfer your FHSA funds to an RRSP if you don’t buy a home.
6. Be careful about non-qualifying withdrawals as they will be added to your taxable income.
7. Unlike an RRSP, you can’t deduct FHSA contributions made in the first 60 days of the year from your prior year’s income.
8. You can use both the FHSA and HBP to buy a qualifying home.
9. Two FHSAs can be used to buy a home if both buyers are first-timers.

Now, let’s talk about strategies and considerations to help you maximize your FHSA benefits:

1. Use your FHSA before contributing to an RRSP or TFSA to take advantage of the extra tax benefits.
2. If you’re a parent who wants to help your kids own a home, consider gifting them $8,000 a year for their FHSA. This will allow them to invest and grow their savings early on while enjoying a tax deduction.
3. You can even defer (carry forward) your FHSA deductions to a future year when you’re in a higher tax bracket, saving you even more tax. The same strategy can be applied to your RRSPs.

Ready to make your homeownership dreams a reality? Click here to check out the CRA’s page for complete details on the FHSA and start saving now!