As you may be spending time with family or extended family this weekend, we thought it an opportune time to reach out to advise you of a new investment vehicle for those who have not yet purchased their first home. The new First Home Savings Account (FHSA) is a registered investment account was first introduced as part of the 2022 Federal Budget and is now available to Canadians looking to make their first (qualifying) home purchase. It’s the first new tax-advantaged savings account that has been introduced since the TFSA in 2009.

This type of account is specifically designed to help first-time, qualifying home buyers purchase their first home. It also provides an option for parents or grandparents who are looking for ways to assist the next generation with a future home purchase.

At a high level, the FHSA provides a tax deduction on contributions for the plan holder, like an RRSP, but provides tax-free withdrawals, like with a TFSA, when purchasing a first qualifying home. The FHSA provides a very strategic financial planning opportunity for first-time home buyers, but only if they plan ahead. Contribution room grows by $8,000 per year each year the FHSA is open to a lifetime maximum of $40,000. There are also limitations on how long the account can be active (currently 15 years), so it’s important to understand the rules to take full advantage of this new account.

We are always on the lookout for ways to minimize the impact of taxation for you and your family. If you have a family member who is looking to start saving to buy their first home, we would be happy to connect with you to discuss the benefits of setting up an FHSA, or any other financial planning items that come to mind.