Is owning your first home a possibility within the next 15 years? If yes, then activating a First Home Savings Account (FHSA) before this year winds down is a savvy move. Here’s the deal: contributions to your FHSA must happen within the calendar year to count towards that year’s taxes — unlike the RRSP which allows you to contribute in the first 60 days of next year.
Kickstart your account with any amount, as the FHSA’s rollover perk lets you transfer up to $8,000 of unused contribution room to the following year. That’s right, open it now and you could funnel a substantial $16,000 next year if you contribute less this year.
Every dollar you contribute slashes your taxable income, potentially pocketing you hefty savings at your tax rate. And here’s the kicker: unlike RRSP withdrawals, the funds for your first home are not only tax-free, but they don’t need to be repaid. And if plans change and you don’t buy a home, you can always transfer the amount to your RRSP without affecting your RRSP contribution room.
Not everyone can open one. You must be a Canadian resident, at least 18, and a first-time buyer by the program’s definition, which means you or your spouse did not own a home where you lived during the current or previous four years.
Navigating the FHSA waters? I’m here to help. Let’s connect and make your future home a reality.
