📋 Tender Overview
As house prices have climbed, saving for a down payment has become increasingly out of reach for far too many Canadians, particularly young people. The government’s new tax-free First Home Savings Account is now available and will help put homeownership back within reach for Canadians across the country.
The new tax-free First Home Savings Account is a registered savings account that helps Canadians become first-time home buyers by contributing up to $8,000 per year (up to a lifetime limit of $40,000) for their first down payment, within 15 years. To help Canadians reach their savings goals, First Home Savings Account contributions are tax deductible on annual income tax returns, like a Registered Retirement Savings Plan (RRSP). And, like a Tax-Free Savings Account (TFSA), withdrawals to purchase a first home—including any investment income on contributions—are non-taxable. Tax-free in; tax-free out.
As of today, First Home Savings Accounts are available at seven financial institutions, and more are set to offer First Home Savings Accounts soon.
Here is an example of how the First Home Savings Account can help Canadians save for their first down payment and benefit from tax relief:
Olivia and Amira are looking for a first home in Ontario. They each save the maximum $8,000 per year in their First Home Savings Account, which they can deduct from their income at tax time. They both make between $70,000 and $100,000, which means for every $100 contributed to their First Home Savings Account they receive $20.50 in federal tax savings to each receive an annual federal tax refund of $1,640.
After five years of saving, Olivia and Amira have a combined $90,000 (including $10,000 in investment returns) that they can withdraw tax-free for a down payment on their first home. Over five years, they will have benefitted from a combined $18,450 in federal tax relief, in addition to nearly $8,000 in provincial tax relief.
They use their First Home Savings Account as a 10 per cent down payment to qualify for a mortgage and purchase their first home for $900,000.
When Olivia and Amira file their taxes after buying their first home, they will receive an additional $1,500 in federal tax relief through the First-Time Home Buyers’ Tax Credit.
Quotes
“Our government believes that everyone should have an affordable place to call home, and we are focused on building more homes and making housing more affordable across the country. For too many Canadians, saving for that first down payment seems impossible and out of reach. That is why we promised and are delivering on the new tax-free First Home Savings Account—a key part of our plan to put homeownership back within reach of Canadians and to help Canadians save for their first home.”
- The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance
“For too many Canadians the dream of owning their first home is slipping further out of reach. That’s why our government is introducing the First Home Savings Account, a tax-free account for aspiring homeowners to save for the home of their dreams. This initiative is a testament to our government's commitment to help families find and afford a safe place to call home.”
- The Honourable Sean Fraser, Minister of Housing, Infrastructure and Communities
“As we emerge from the global inflation crisis, Canadians are seeing the signs of economic recovery and are saving to buy their dream home through the new First Home Savings Account. Tens of thousands of young Canadians are already taking advantage of this new tax-free way to put aside money to build their future. This game-changing way to invest will allow more young Canadians to become homeowners, while leaving more money in their pockets.”
- The Honourable Marci Ien, Minister for Women and Gender Equality and Youth
“Canadians can now reach their goal of home ownership quicker through the tax-free First Home Savings Account. By opening up an account, Canadians can save up to $8,000 tax-free each year and make their money go further. In combining measures that help put homeownership within reach, like the First Home Savings Account, with a strategic and economic immigration approach, the federal government is making housing more affordable and bringing in the skilled workers required to build more homes. With provinces needing workers to meet housing demands and the home building sector facing immense challenges in acquiring talent, it is crucial for immigration to be factored into the overall approach as newcomers are an undeniable part of the solution.”
- The Honourable Marc Miller, Minister of Immigration, Refugees and Citizenship
