Why you should open an FHSA before year-end!

As 2024 comes to an end, now is the perfect time to think about opening a First Home Savings Account (FHSA). You might be in the process of saving for your first property, or you might be planning for much later in the future. In any case, this account provides several benefits to new home buyers that make it an extremely useful tool. Here’s why opening an FHSA before the end of the year can help you get ahead with your homeownership goals!

The big benefits of an FHSA

An FHSA combines the best parts of Registered Retirement Savings Plans (RRSPs) and Tax Free Savings Accounts (TFSAs). You can save for your first home purchase with significant tax advantages which help you reach your goals faster. Opening an account before the end of the year means you can still claim your $8000 contribution limit for the year. You can also carry over contribution room to the next year if it is not used, allowing you to contribute more in a shorter period of time. Opening an account now means maximizing your ability to save.

Your FHSA contributions are tax-free, meaning they can grow freely without any restrictions on withdrawals and returns. The sooner you start adding money to your account, the sooner you start building those savings and growing your down payment. Plus, your FHSA contributions are also tax deductible. Any amount you contribute will reduce your taxable income for the year, allowing you to pay less tax and free up more money to help grow your account. 

What do you need to open an FHSA?

In order to open an FHSA, there are a few requirements you must meet. The good news is these are pretty simple! You must be a Canadian resident who is at least 18 years old, and you must be considered a first-time home buyer. In this case, a person is a first-time buyer if they have not lived in a home that they or their spouse have owned in the past four years. These straightforward guidelines make the FHSA a highly accessible option for home buyers. 

Why you should act now!

The end of the year is the perfect time to think about your financial and homeownership goals, and start planning ahead. If you choose to open an FHSA now, you will gain contribution room and you can make the most of your savings over the upcoming years. Once you open your account, you have 15 years to buy a home. Plus, if you ultimately decide not to purchase a home, it’s no problem! The FHSA is very flexible. You can transfer the funds to your RRSP tax-free, so you can still take advantage of the time you spent saving up.

We are here to help you navigate the journey towards homeownership. No matter where you are in the process, we can guide you through this experience and grow your confidence and savings! Now is the time to take advantage of the FHSA and bring yourself one step closer to homeownership.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.