First Home Savings Accounts (FHSAs), which were introduced this year but are not widely available just yet, are a great way for people to save for their first home.
You get the best of a TFSA (tax-free growth and withdrawals) and the best of an RRSP (tax-deductible contributions).
If you open an account this year, you can contribute up to $8,000. But even if you don’t have $8k to contribute right now, that amount carries forward to next year. (So if you contribute $2,000 this year, say, next year you can contribute $6,000 + $8,000 = $14,000).
Over your lifetime you can contribute $40,000 (per person) and the account can stay open for 15 years. (So there’s no rush to buy a home).
A great tax move, if you already have money in a TFSA that will eventually go toward a down payment, is to pop $8k out and get the tax deduction.
I’m not sure how FHSAs will make housing any more affordable in Canada (the real answer is to increase housing supply AKA build more places for people to live), but we use the tools we are provided to reach our goals.
If you’re looking to buy a home, the FHSA is now one of the best.
*FHSAs aren’t yet widely available at most financial institutions, but they’re in the works almost everywhere and should be good to go before the end of the year. If you want to chat about opening one, hit me up.