09/12/2023
Ready to set some money saving goals?!
As if TFSA vs RRSP (goobly, goobly wxyz?) wasn't confusing enough for some of us - the Canadian government introduced a new product this year - the FHSA (First Home Savings Account). And most banks are now ready to offer it! But what is it? Do you need it? Are you even eligible?
Here's the short version - the FHSA is super exciting! (Yes - I'm serious 🤓) IF you hope to purchase a home in the next 15 years - it's the ideal vehicle to save for that goal. The money you invest is tax deductible (like your RRSP) which means it would reduce the amount you owe in income taxes for that year. But, UNLIKE your RRSP, your money is also tax sheltered. This means you won't pay taxes on it (or its growth) even when you take it out! Provided you use it to buy a home that will be your primary residence. The name of this account is a little misleading though. Even if you have previously owned a home - you can still invest! As long as you have not lived in a home you or your partner owns for at least 5 years. If you don't end up buying a home within 15 years - the funds can be transferred to an RRSP.
Parents of young adults - if your kids are working and trying to save money... This could be a GAME CHANGER!! They can start investing as young as 18 or 19 (depending on your province). They then have 15 years before the money needs to be transferred out.
For a longer explanation of the FHSA, check out Adrian, the Canadian in a t-shirt (YouTube link below). You can skip through his Quest Trade plug if you just wanna get to the good stuff.
https://www.youtube.com/watch?v=l-vFR14I12k
You can also visit https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-closing-and-fhsa.html for the government's official FHSA explanation.
What is the FHSA? How Do I Open an Account with Questrade? How Can the First Home Savings Account Help me Save Up for a Down Payment? Why Should I Invest wit...
