Is having your own home in Canada a dream for you? Now you can turn your dreams into reality with the Tax-Free First Home Savings Account. Let’s find out more about this today.
Tax-Free First Home Savings Account
The federal government of Canada has come up with a new initiative to help first-time homebuyers. This is called the Tax-Free First Home Savings Account (FHSA).
As a first-time homebuyer, you can save up to $40,000 through this registered savings. And then you can use it to buy your own single-family home.
What happens is that the FHSA combines your registered retirement savings plans (RRSPs) with the features of tax-free savings accounts (TFSAs). So this would give you a chance to steadily build your savings with a limit for an annual contribution of $8,000.
Benefits and Eligibility for the FHSA
Now to be eligible for the FHSA, you must have the following:
- Be a Canadian resident
- Be at least 18 years
- Must be a first-time homebuyer
Remember that this is a per-person account. So if you’re planning to make a purchase with your spouse or common-law partner, you can only access $80,000.
Any unused contributions will be carried forward, just like the TFSA and the RRSP contribution room.
How To Open and Use The FHSA?
You can easily open an FHSA at any financial institution that offers RRSPs and TFSAs. These can include:
- Credit Unions
- Banks
- Life Insurance Companies
- Canadian Trust Companies
There’s no need for you to stress out because opening an FHSA is quite a straightforward process. Once you open it, you can start saving immediately for your first home.
How To Maximize the FHSA Benefits
You’ll be happy to know that through the FHSA you can benefit from tax-free savings, speeding up your home ownership process.
The FHSA allows you to save on down payments, closing costs, and even additional expenses that come along when buying a home.
If you’re careful enough with your planning and are consistent with contributions, you can maximize your savings and become a homeowner soon as well.
The Tax-Free First Home Savings Account is an excellent tool for first-time Canadian home buyers.
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