The First Home Savings Account (FHSA) is the newest savings account offered to Canadians to help save for their first home. This new account combines the best features of a Registered Retirement Savings Plan (RRSP) with the tax-deductible contributions, and a Tax-Free Savings Account (TFSA) with the tax-free withdrawals. Starting this year, eligible clients will be able to contribute $8,000 a year up to a maximum of $40,000 to the FHSA. Utilizing this account helps leverage any current savings that are in a non-registered account or TFSA that are earmarked for a down payment in the future. 

Unlike a TFSA, contribution room only starts to accumulate once you open the FHSA. If you qualify as a first-time home buyer, we would recommend you consider opening a FHSA this year, even if you don’t have the funds to make a contribution. Once open, any unused contribution room (up to a maximum of $8,000) can be carried forward and contributed in a subsequent year in addition to the annual contribution limit of $8,000. For that reason, opening a FHSA early on will give you the most flexibility in later years to maximize the value of this account. 

If you or anyone you know would like to learn more about these new accounts, please reach out to the team and we would be happy to help.

Best,

Livingston Wealth Management Group