Dear Cheryl&Mack,
I'm planning to buy a house this year and considering different options to save for the down payment.
Is opening a First Home Saving Account (FHSA) worth it in terms of the potential benefits, such as government contributions and tax advantages, compared to other savings or investment options?"
Signed,
First-timer
Dear First Timer,
A First Home Savings Account (FHSA) is a type of registered plan, which means you can hold investments in it to help you reach your goal of owning a home faster.
Since your investment earnings aren’t taxed, your money will have the opportunity to grow faster in an FHSA than it would in a traditional savings account.
You can make tax-deductible contributions of up to $8,000 a year in an FHSA, up to a lifetime maximum of $40,000. Unused rooms can be carried over to the next year, up to a maximum of $8,000.
Other things to consider:
You can contribute tax-free for up to 15 years
Unused contribution room can be carried over to the next year, up to a maximum of $8,000
Potentially reduce your tax bill and carry forward contributions indefinitely
Pay no taxes on any investment earnings
Complements the Home Buyers’ Plan (HBP) - if you have an RRSP
Remember, the decision to open an FHSA should be based on a good understanding of your financial situation, goals, and the specific features of the FHSA available to you.
It's advisable to conduct thorough research, consider all available options, and reach out to CC&Associates if needed to make an informed decision.
Good Luck!