April 19, 2023.
Many Canadians are anxiously awaiting the availability of the newest ‘Tax-Free Saving Account’, slated to be available in the coming months. The First-Home Savings Account (FHSA) was first proposed in the 2022 Federal Budget to support those trying to save for their first home. Who should consider this plan? How can parents help their children by using this plan? I’ll explain what it is, how it compares to other plans, and how it can best be used.
It’s been a difficult time for some first-time homebuyers. With interest rates at their highest point in decades and home prices out of the reach for many, the government is providing a new alternative and incentive for saving for a down payment. And it has some very attractive features!
Over the years, the government has introduced ways to encourage people to save – in general, for retirement, and now, to buy their first home. Up until now, the Tax-free savings account (TFSA) was a good option to save for a home, as well as the RRSP Home Buyers Plan (HBP), which allowed first-time home buyers to withdraw funds from their RRSP tax-free to make a down payment. The catch with the HBP is that the amount needs to be paid back, otherwise it’s taxed!