There’s a shiny new addition to your saving strategy: it’s the Tax-Free First Home Savings Account, which officially came into effect on April 3, 2023.
With the FHSA, you can contribute $8K a year – to a max of $40K. To qualify, you or your partner cannot have owned a property in the last 4 years, and you can only use it to buy a place you’re going to live in yourself. And don’t worry, even though it’s already April, you still have a full year of contribution room for 2023.
So if you’ve got up to $8K to sock away this year, you can. And here’s the best part: unlike the First-Time Home Buyers’ Plan (more on that below), you don’t have to pay it back. And you can combine the two programs to help you get to your goal faster.
Need more details? This very comprehensive overview from the Department of Finance will tell you everything you need to know (and probably much more).
The tried-and-true classic: the First-Time Home Buyers’ Plan
This tax-free vehicle has been around for a long time – it lets you pull up to $35,000 out of your RRSP to use towards your new home, and gives you 15 years to pay it back, with zero interest and 100% tax-free.
To qualify, you cannot have owned a home in the last 4 years or lived in a place owned by your spouse or common-law partner in the last 4 years. And it can only go towards a place you’ll actually be living in – so investment properties don’t count, even if they are your first real estate purchase.
And the limit is $35K per person, not total. So if you’re buying with a spouse or common-law partner, you can combine two Home Buyers’ Plans and borrow up to $70K.
(One important thing to keep in mind: the funds have to be in your RRSP for a minimum of 90 days before you can use them.)
Visit this Government of Canada info page for all the details.
And one more thing…
First-timers also get a break on land transfer taxes – there’s an Ontario tax AND a Toronto tax (so if you’re buying in the city, you’ll get hit twice). First-time buyers are eligible for an Ontario Land Transfer Tax rebate of up to $4,000, and for Toronto properties, you can get back a max of $4,475.
Read more: Everything you need to know about land transfer taxes
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