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Saving to Buy a Home in Canada? This Will Help You Do It Faster!

Written by CNN Team

Sponsored By CIBC

Preview text: We provide you with details on the exciting new FHSA that helps prospective buyers save for a first home in Canada.

Do you have dreams of owning a home in Canada for the first time? Then we have good news because a unique new type of registered plan is about to launch that is specifically designed to help you save for that goal. Keep reading to find out more about this exciting new plan.

What is the FHSA?

A First Home Savings Account (FHSA) is a new, tax-free registered plan designed to help Canadian residents save for the purchase of their first home.

How Does It Work?

The FHSA provides eligible first-time homebuyers with the ability to contribute $8,000 annually, up to a maximum of $40,000 (lifetime contribution limit) to use towards the purchase of a qualifying first home in Canada.

Like a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), the FHSA can hold various types of investments, including mutual funds, publicly traded securities, and more. Like an RRSP, contributions to an FHSA will be tax deductible, but withdrawals to purchase a qualifying home, including any investment income or growth earned in the account, will be non-taxable, like a TFSA.

In short, your investments can grow tax-free to help you towards your goal of saving for a qualifying first home.

Who Can Open an FHSA?

If you’re a newcomer to Canada, you can open an FHSA if you’re a Canadian resident for tax purposes who has a SIN or temporary SIN. In addition to being the age of majority in your province or territory of residence, you must also meet the criteria for a “first-time homebuyer”.

To be considered a first-time homebuyer, you must not have lived at any time during the part of the calendar year before the account is opened or at any time in the preceding four calendar years, in a “qualifying home” as your principal place of residence (or what would be a qualifying home if it was located in Canada) that either:

(i) you owned or

(ii) your spouse or common law partner owned (if you have a spouse or common law partner at the time of opening the account).

Why Should You Open One?

  • Get tax benefits: Your FHSA contributions may help you reduce your taxable income.
  • Grow your savings, tax-free: Any investment income in your FHSA is non-taxable while it’s in your account.
  • Save for your first home, tax-free: Pay no taxes on your withdrawals when you use your FHSA towards the purchase of a qualifying home. 

When Can I Open My FHSA at CIBC?

We’re glad you’re excited about saving for your first home! This new registered plan is coming to CIBC in November this year! Sign up for updates to be contacted when it becomes available, so you can start maximizing saving for your first home.

For newcomer banking offers you can claim right now, we recommend the CIBC Smart™ Account for Newcomers.

For more newcomer content on housing in Canada, read more here.

The CIBC logo and CIBC SmartTM Account are trademarks of CIBC.

*Opinions expressed are those of the author, and not necessarily those of Student Life Network or their partners.