The 2022 federal budget proposed a new savings tool for Canadians – the Tax-Free First Home Savings Account (FHSA). The Department of Finance has recently announced more details about the account, which is expected to be available “at some point in 2023”.

The purpose of the FHSA is to allow first-time home buyers to save for a down payment. The new account will combine features of an RRSP and a TFSA. Contributions to a FHSA would be tax-deductible (like RRSP contributions) and withdrawals to purchase a home would not be taxable (like a TFSA).

The annual contribution limit will be $8,000, with a lifetime contribution limit of $40,000. The account will be able to hold the same type of investments as a TFSA, including mutual funds and GICs.

Contact us if you’d like more details on this new savings account.