A new savings account is out there to help you purchase your first home!
The Tax-Free First Home Savings Account (FHSA) is a new federal savings program! It is designed to assist Canadians in saving to buy a home for the first time. This savings account acts like a Registered Retirement Savings Account (RRSP) and a Tax-Free Savings Account (TFSA). The contributions you make to it are tax-deductible (like an RRSP), and the withdrawals to purchase a home are non-taxable (like a TFSA).
Like with RRSPs and TFSAs – there are yearly contribution limits for the FHSA. You can contribute up to $8,000 a calendar year to the FHSA, with a lifetime maximum of $40,000. Any unused yearly contribution room carries over. That means you could contribute less one year and still make up the difference in the next year.
This savings account is available to all Canadian residents 18 years or older but has some restrictions. This savings account is designed for first-time home buyers. As such, it can only be used towards purchasing a home. As well, you can not have not owned and lived in a home in the last 4 calendar years. It can also only be used to buy a house in Canada.
There are some time-related restrictions as well. You can only have a FHSA open for 15 years. After that, or at the end of the year you turn 71, you will have to close it.
But what happens if you don’t use your FHSA contributions to buy a home?
If you don’t use your contributions to buy a home, you can transfer those savings – TAX FREE! FHSA contributions can be put into your RRSP or Registered Retirement Income Fund (RRIF) without being taxed. Otherwise, any withdrawals made will be considered taxable income.
At Integris, we have actively worked with Central 1 on building the internal systems for this savings account. We’re ready to help you start saving for your first home today!
If this savings account sounds perfect for you to reach your home ownership goals – we can help! Visit one of our branches today or call 1-866-554-3456 from the comfort of your own home.
For more information on the savings programs: Government of Canada Tax-Free First Home Savings Account
