Government of Canada launch an account called FHSA -First Home Savings Account.  It is a new type of registered account that is designed to help first-time home buyers purchase their first home.

One of the greatest benefit is that the contribution to FHSA is tax deductible i.e. you get tax credit for saving money in the account and also withdrawal is tax free – You don’t pay tax when you make eligible withdrawals and withdrawals are not paid back like RRSP.

To be eligible to open FHSA account, you must:

• Be a Canadian Resident
• Must be 18 years or older.
• Be a first-time home buyer.
• Maximum yearly contribution you can save is $8.000.
• You can carry over unused contribution, but you cannot contribute more than $16,000 in a year.
• Maximum total contribution you can save is $40,000.
• When you withdraw money, you don’t get the room back.
• If you overcontribute to the account, you will pay 1% penalty per month on the excess of the contribution. You can hold investment in the account and can only keep the account for 15 years
• Remaining balance in the account after 15 years must be transferred to RRSP account.

If you want to learn more about FHSA or you need help to open an account, email me.