Canada's new Tax-Free First Home Savings Account is available starting today
Planning on buying your first home in the coming years? You can now open a new tax-free savings account.
One of the proposed measures announced in the 2022 federal budget kicks in today.
Banks can officially start offering the Tax-Free First Home Savings Account (FHSA) on Saturday, April 1, according to the 2023 fiscal budget. As part of Ottawa’s plan to make housing more affordable, it aims to help Canadians save for a down payment to buy their first home.
This is what today’s budget invests in: the possibility for every single Canadian to share in the remarkable opportunities that Canada provides—and in the new era of prosperity that we will build together. https://t.co/HNLLGYVnMs
— Chrystia Freeland (@cafreeland) March 28, 2023
The new registered plan gives prospective first-time homebuyers the ability to save $40,000 on a tax-free basis.
The government compares it to the Registered Retirement Savings Plan (RRSP) in that contributions to the FHSA will be tax-deductible.
And just like a Tax-Free Savings Account (TFSA), withdrawals to purchase a first home—including from investment income—will be non-taxable.
“Tax-free in; tax-free out,” reads the budget.
The annual maximum contribution to the account is $8,000 per year. The government is estimating that the FHSA would provide $725 million in support over five years.
Before you decide to open an account, here’s everything you should know about the FHSA.
Canada’s 2023 budget also announced a new one-time grocery rebate and a new dental care plan for millions of uninsured Canadians.
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