Starting April 1, 2023, first-time homebuyers can take advantage of the First Home Savings Account (“FHSA”) to save for a down payment to buy their first home.
Under the FHSA program, prospective home buyers can contribute $8,000 annually to an FHSA and deduct their contribution from their taxable income. Any income earned in the FHSA will accumulate tax-free. If you don’t contribute in a particular year, then you can’t roll over your unused contribution to the next year, unlike an RRSP. There is also a lifetime contribution limit of $40,000.00.
Prospective first-time home buyers can use the FHSA in addition to the Tax Free Savings Account (“TFSA”) and the Home Buyers Plan (“HBP”) to save tax-free for a down payment on a home.