There is still time to squeak in some savings for your first home. In April of this year, the federal government introduced the First Home Savings Account. This new savings tool is a registered plan allowing you, as a prospective first-time home buyer, to save for your first home tax-free (up to certain limits) and tax deductible.
How it works
To be eligible a person must be at least 18 and no more than 71 as of December 31, a resident of Canada and a first-time home buyer. The definition of a first-time home buyer is someone who did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home as your principal place of residence that either you owned or jointly owned or your spouse or common-law partner (at the time the account is opened) owned or jointly owned.
- $8,000 annual tax-deductible contribution limit. It is the maximum amount you can contribute each year or carry forward to the following year.
- $40,000 lifetime tax-deductible contribution limit. This is the total maximum amount you can invest in tax-free savings for a first home purchase.
- 15 years of tax-free savings. A deposit can reside in your FHSA, tax-free, for a maximum of 15 years.
What to do now
You can open an account and deposit up to $8000 before Dec. 31, 2023, and deposit another $8,000 for 2024 and so on.