Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced that over 150,000 Canadians have already opened a tax-free First Home Savings Account (FHSA) to save for a down payment on their first home.
This initiative is reshaping the path to homeownership for Canadians, making it more accessible and affordable than ever before. Here’s everything you need to know about this incredible opportunity:
What is the First Home Savings Account?
Savers can contribute up to $8,000 per year, with a lifetime limit of $40,000. This means you can steadily build your down payment fund while enjoying substantial tax benefits.
How Does It Work?
Similar to a Registered Retirement Savings Plan (RRSP), your contributions to the First Home Savings Account are tax-deductible. This reduces your taxable income, putting more money back in your pocket during tax season.
When you’re ready to make your home purchase, withdrawals from the account, including any investment income, are entirely tax-free.
This feature is similar to a Tax-Free Savings Account (TFSA), ensuring you keep every hard-earned dollar for your dream home.
Types of FHSA Accounts:
There are three types of First Home Savings Accounts offered by financial institutions:
- Depositary FHSA: A bank account with cash, term deposits, or guaranteed investment certificates (GICs).
- Trusteed FHSA: Opened with a trusted company and contains qualified investments such as cash, term deposits, GICs, government and corporate bonds, mutual funds, and securities listed on a designated stock exchange.
- Insured FHSA: A contract for an annuity with a licensed annuity provider.
- Gather Required Documentation: You’ll need a Social Insurance Number (SIN), proof of date of birth, and other documents proving your eligibility as a first-time homebuyer and Canadian residency.
- Choose a Financial Institution: You can open a First Home Savings Account at any Canadian government-approved financial institution, including banks, credit unions, trusts, or insurance companies.
- Contact the Bank: Call your preferred financial institution or the one you already have an account with, to initiate the process of opening a First Home Savings Account.
Where Can You Get It?
As of the recent announcement, the First Home Savings Account is offered by over twenty financial institutions across the country.
Many more are in the process of launching this fantastic savings opportunity, making it convenient for you to find a provider that suits your needs.
With over 150,000 Canadians already seizing this opportunity, the tax-free First Home Savings Account is transforming dreams into reality.
Say goodbye to unreachable down payments and hello to your future home sweet home. Start your journey today and watch your homeownership dreams come true!