Open a First Home Savings Account before the end of 2024

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With a few days left in 2024, it is time to open a FHSA if you have not and take advantage of this especially if you planning to buy your first home soon. As a newcomer to Canada, opening a First Home Savings Account (FHSA) is a smart move if you are planning to buy your first home. The FHSA is a relatively new savings account designed specifically for first-time home buyers, offering tax benefits that can significantly boost your savings over time.

Why Open an FHSA Before the End of 2024?

  1. Tax-Free Growth: Contributions to an FHSA are tax-deductible (like an RRSP), and withdrawals used for your first home purchase are tax-free (like a TFSA). By opening the account before the end of 2024, you can maximize your tax benefits for this year and start building tax-free growth immediately.
  2. Contribution Room: The FHSA allows you to contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. If you open your account in 2024, you can contribute the full $8,000 for this year and begin building your savings earlier. Any unused contribution room in 2024 can be carried forward to future years, which means you won’t lose out on any potential benefits.
  3. Increased Time for Growth: Starting early gives your savings more time to grow, especially if you invest in growth-oriented assets like stocks or mutual funds. The earlier you start contributing, the more time your investments have to potentially appreciate before you make a withdrawal for your home purchase.
  4. Access to Full Contribution Limits: If you open your FHSA in 2024, you can contribute the full $8,000 for this year and still take advantage of your full $8,000 contribution limit in 2025. This means you could potentially save $16,000 over the first two years, with a total lifetime contribution of $40,000.

Key Benefits of the FHSA:

  • Tax-deductible contributions: Contributions reduce your taxable income, just like an RRSP.
  • Tax-free withdrawals: Withdrawals for a first-time home purchase are tax-free, similar to a TFSA.
  • Annual and lifetime limits: $8,000 annually, up to $40,000 in total contributions.

By opening your FHSA before the end of 2024, you can start benefiting from these advantages right away, making it a valuable tool in achieving your goal of homeownership in Canada.

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*The information provided here is for educational purposes only. Consult professionals before making any financial or real estate decisions.

*This is not intended to solicit Sellers or Buyers under contract.

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