Young investors! Do you dream of one day owning your first home?
Seasoned investors. Do you know a young investor in your life that one day dreams of owning their first home?
This post is for you.
New in 2023, allow me to introduce you to the First Home Savings account (FHSA). Legislated into law earlier this year, and combining elements of the TFSA and the RRSP, the FHSA is an incredibly useful tool for those saving to purchase their first home. Attached to this post, you will find a helpful article from RBC Wealth Management, that explains the mechanics of the FHSA. To assist in the learning process, I have highlighted several key features of the FHSA below.
- Annual contributions to the FHSA can be used as a tax deduction when filing your annual tax return. This is similar to contributions made to an RRSP.
- Withdrawals from the FHSA (must be used for the purchase of your first home) are tax free.
- Investment returns in the FHSA compound on a tax free basis
- There is no minimum time frame that funds must remain in the FHSA before being eligible for withdrawal
- There are both annual, and lifetime maximum contribution limits for the FHSA
- The investor is responsible for determining eligibility for the FHSA
- Using an FHSA, does not affect eligibility for the First Time Home Buyers program
KEY POINT (#4) - if you are in the market now, or even if you have a firm purchase agreement in place, I would encourage you to take advantage of the FHSA right away. Get that contribution in for tax year 2023, so you can claim the deduction on your 2023 filing.
As always, please feel free to reach out to our team if you have questions, or if you want further information. This is an excellent savings program that all first time buyers should be taking advantage of.
Happy house hunting.
Jeremy