On April 1, 2023, the Canadian Government introduced the new Tax-Free First Home Savings Account (FHSA). It will allow first time home buyers to save up to $40,000 per person towards their first home. The FHSA doesn’t replace the RRSP Home Buyers Program (HBP). It can be used on its own or in combination with the RRSP HBP.
How does FHSA compare?
The new account is a hybrid between a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). Individuals benefit from:
-tax deductions on contributions to the product,
-investments grow tax-free, and
-withdrawals used to buy their first home are not subject to tax.
Canadians get to contribute $8,000 annually with a lifetime maximum of $40,000.
Why is it important?
The FHSA is another savings product to help home buyers with the purchase of their first home.
It helps Canadians save for goals other than retirement;
It aligns with younger generations to help build and create savings patterns.
Want to learn more about FHSA? Call the team at Innovative Wealth Warren, Phil or Alex are ready to help.
Warren Ferguson, CFP