How the Tax-Free First Home Savings Account can be used beyond buying a home

Globe & Mail
April 27, 2022.

The new Tax-Free First Home Savings Account (FHSA) fills a gap between registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) because it offers the benefits of both of those investment vehicles – a tax deduction and tax-free withdrawals. That, in turn, should result in more accessible cash for first-time homebuyers.

The FHSA is the investment vehicle proposed in the federal government’s 2022 budget as part of the housing plan meant to help more Canadians get into the housing market.

“Where [the FHSA] distinguishes itself is that contributions are tax-deductible and withdrawals from the plan, including any investment growth on your contributions, are tax-free, provided they’re being used to fund the purchase of your first home,” says Sean Hsu, senior tax specialist, tax and estate planning, at Richardson Wealth Ltd. in Toronto.

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