By Brad Brain
Recently I had a mom ask about RRSPs and TFSAs on behalf of her son, who had just turned 19 and wants to buy a house one day. I already like where this conversation is going, but I am going to make it even better.
The FHSA: A Once-in-a-Lifetime Opportunity
I am honestly surprised that First Home Savings Accounts are not yet well known. Sure, they are still relatively new. But the FHSA is a game-changer for people looking to buy their first home.
Here’s the deal: you can contribute up to $8,000 a year, to a maximum of $40,000 total, and your contributions are tax-deductible, just like an RRSP. That means you get save on taxes right now, as you build your savings. But here’s the kicker: when you eventually take the money out to buy your first home, and even though you received a tax deduction when the money went in, the withdrawal is completely tax-free.
Let that sink in for a moment. You get a tax break when you put the money in and you don’t pay tax when you take it out. It’s the best of both worlds.