Is there a specific type of savings account for first-time home buyers?
In the 2022 Federal Budget, the Canadian government announced that they’re creating a new tax-free First Home Savings Account (FHSA) to help Canadian residents save up to $40,000 to buy their first home.
Where available, Canadian residents will be eligible to open a FHSA provided that:
- they’re over the age of 18 and
- they’re a first-time home buyer who hasn’t lived in a home they owned at any time during the part of the calendar year before the account is opened or at any time in the past four calendar years.
FHSA contributions will be tax-deductible. This means that you can claim a deduction and lower your taxable income, which may reduce the amount of tax you’ll have to pay overall.
And, like a TFSA, investment growth and withdrawals from a FHSA will be tax-free -- that’s provided you use your withdrawals to buy your first home.
What’s more, the lifetime limit on contributions would be $40,000, with an annual contribution limit of $8,000. It’s up to you to know and monitor your contribution limits.
Please remember that the FHSA won’t be available until 2023. Connect with a Sun Life advisor to find out how you can start saving up money to buy a house.
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