If you are 18 years or older and will one day be buying your first home, it is likely in your best interests to open a First Home Savings Account (FHSA) before year end.  Even if you do not plan to contribute the $8,000 permitted in 2023, by opening an account before December 31, you will be able to carry forward that contribution room to future years (contribution room starts accumulating from the year the FHSA is opened).

 

The FHSA combines some of the benefits of a Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). Contributions to an FHSA are tax-deductible like an RRSP, and like a TFSA, income and gains inside an FHSA , as well as withdrawals for the purchase of a first home, are tax-free.

 

Some features of the FHSA include:

Contribution limit is $8,000 annually, up to a maximum of $40,000, and the contributions are tax-deductible.

You do not need to claim the contribution in the year it was made and can carry forward and deduct it in a later year.

Unused contribution room can be carried forward (up to a maximum of $8,000).

Income and gains are not taxable and grow tax-free inside an FHSA.

RRSP contributions can be transferred to an FHSA tax-free.

If funds within an FHSA are not used to purchase a home, the money can be transferred to an RRSP on a tax-free basis.

The holder of the FHSA can withdraw the money tax-free if those funds are used to buy one’s first home.

 

Many of our clients and our clients’ children/grandchildren have already opted to open the FHSA.  If you think you qualify or have any questions relating to the FHSA, we would encourage you to contact our team.

 

Cole Desgagnes      613 531 5501     cole.desgagnes@cibc.ca

Sophie Cooke          613 531 2928     sophie.cooke@cibc.com

 

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