Tax-Free First Home Savings Account

“Jayden and Kiara want to save up to buy their first home in the next 15 years. They hope they can both maximize the full $40,000 over 15 years in an FHSA, but they’re not sure today. They’re questioning if they should open an FHSA or use the Home Buyers Plan in an RRSP?

In this case, the FHSA offers an upfront contribution benefit like an RRSP, plus the tax-free benefits of qualifying withdrawals like a TFSA. As an added benefit they would not have to pay those withdrawals back (as they would with the Home Buyer’s Plan from their RRSP) so they’ll most likely want to go with an FHSA under these circumstances. If they never buy the house in the future, they may be able to redirect the funds to an appropriate RRSP account. Jayden and Kiara make an appointment to talk with a Libro Coach to make sure they get the right investments and accounts suited to their life. And who knows, 15 years is a long time! Their Libro Coach is going to follow up with them to make sure they continue to get good advice for their personal situation along the way!”

“Omar has been working at his first job out of university for several years and has been saving money in a TFSA. He’s realizing that now would be a good time to start saving for a house, but because of a recent promotion and being taxed in a higher bracket, wants to utilize FHSA contributions for tax savings purposes on his income, while saving for his goal. It sounds like Omar’s on the right track!

After meeting with a Libro Coach he set up a pre-authorized contribution to automatically save money into his FHSA, plus they determined how to best balance his TFSA and FHSA savings goals.”

“Jelisa has been well on her way with investments in an RRSP for years. She wants to shift focus and start saving for a home. She’s not sure she’s ready to give up renting her current apartment, as it really has some handy amenities and is in the perfect location for her.

After meeting with a Libro Coach, together they determined that an FHSA would be a good option for her because she seems to want to save for her first home within the next 15 years. If she does decide to stay in her apartment for good and not buy her first home, she could later move her money from the FHSA to an RRSP. She would be taxed on withdrawals from the RRSP, but hopefully she’ll be withdrawing that much later in life when she’s in a lower tax bracket. Jelisa and her Libro Coach set up a review for a year from now, to ensure this advice continues to be correct for her personal goals and financial situation.”