04/26/2023
Introducing the First Home Savings Account (FHSA), a newly designed tax-advantaged savings account for Canadians looking to save for their first home. This account combines the benefits of both the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) to provide prospective homebuyers with an effective tool to accumulate their down payment.
With FHSA, contributions are tax deductible while withdrawals are tax-free, providing the "best of both worlds" while investing for your home purchase. You can contribute up to $8,000 per year once the account is opened, with a lifetime maximum of $40,000.
To be eligible for FHSA, you must be a current tax resident of Canada, aged between 18 and 71 years old, have not owned a home in the current year or any of the previous four years, and be opening the account to save for buying a qualifying home in Canada.
The FHSA allows you to carry forward unused contributions, up to a maximum of $8,000 per year. You can deduct your annual contributions when you file your income tax, similar to an RRSP.
In summary, the FHSA is an innovative savings account that combines the benefits of a TFSA and RRSP to help Canadians save for their first home. With its tax advantages and contribution limits, it provides a practical way to accumulate a down payment and achieve the dream of homeownership.
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