What is the First Home Savings Account (FHSA)?

As a financial advisor, I often get asked about the best ways to save for a first home. Luckily, there are a few options available to help make the process easier. One option that many people may not be aware of is the First Home Savings Account.

The Tax-Free First Home Savings Account is a new type of account that works much like an RRSP or TFSA because it combines the features of both with a few key differences.

First and foremost, contributions to the FHSA are tax-deductible. This means that any money you put into the account can be subtracted from your taxable income for the year, which can result in significant savings come tax time.

In addition, any interest or investment income earned in the account is tax-free. This can be a huge advantage, especially if you plan on leaving the money in the account for a few years to allow it to grow.

There are some restrictions to be aware of, however. The account can only be opened by individuals who have never owned a home before (you cannot own a home in the calendar year that the account is opened nor in the 4 years preceding that), and is meant for a primary residents only. There are also annual contribution limits. A contribution limit of $8,000 per year with a maximum lifetime contribution limit of $40,000. 

Overall, the First Home Savings Account is a great option for anyone looking to save for their first home. It offers significant tax advantages and can help make the process of saving for a down payment a little bit easier.

If you're interested in learning more, please connect with Jen at Thaker Financial to set up an introductory call.

https://www.canadalife.com/investing-saving/mortgages/buying-your-first-home/first-time-home-buyer-programs/what-is-the-first-home-savings-account.html

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

Disclaimer:

The information provided in this blog post is for general informational purposes only and should not be considered as professional financial advice. The content of this blog post may not be suitable for every individual's financial situation or goals. It is important to consult with a qualified financial professional or advisor, like Jen at Thaker Financial, before making any financial decisions or investments.

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