With the cooling off of the housing market across most of Canada in 2023. The federal government has introduced the new Tax-Free First Home Savings Account on April 1st. The Account is a new registered plan to give prospective first-time home buyers the ability to save up to $40,000 on a tax-free basis. The Account works like a Registered Retirement Savings Plan (RRSP) as contributions will be tax-deductible, and withdrawals to purchase a first home -- including from investment income - will be non-taxable, like a Tax-Free Savings Account (TFSA). First-time home buyers will be able to contribute up to $8,000 annually to a lifetime maximum of $40,000. Unlike an RRSP account, the funds withdrawn do not need to be paid back.
Who is eligible?
To open an FHSA, you must:
- Be an individual resident of Canada.
- Be at least 18 years of age.
- Be a first-time home buyer, which means you, or your spouse or common-law partner (“spouse”) did not own a qualifying home that you lived in as a principal place of residence at any time in the year the account is opened or the preceding four calendar years.
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