Don’t Miss the December 31, 2023 FHSA Contribution Deadline!
Are you dreaming of owning your first home? The First Time Home Buyers Savings Account (FHSA) might just be the key to turning that dream into reality. As the year comes to a close, it’s crucial to remind ourselves about the FHSA and the upcoming December 31, 2023 contribution deadline. Let’s delve into the benefits of FHSA and why you should consider making your contributions before the year ends!
What is FHSA?
FHSA – The Tax-Free First Home Savings Account is a new registered account that provides tax-free savings for first-time home buyers. No repayment is required. No withdrawal limit. Maximum annual contributions of $8,000 and a lifetime total of $40,000. Please visit the GoC website for more information https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html
Key Benefits:
- Tax Advantages: FHSA contributions are tax-deductible, meaning you can lower your taxable income by contributing to the account. This provides an immediate financial benefit, making it an attractive option for those looking to save on taxes while saving for their first home.
- Earnings Grow Tax-Free: The interest or investment gains within the FHSA accumulate tax-free. This allows your savings to grow more efficiently over time, helping you reach your homeownership goal faster.
- First Home Purchase Withdrawal: One of the most significant advantages is that you can withdraw funds from the FHSA for the sole purpose of purchasing your first home. These withdrawals are typically exempt from federal taxes, further enhancing the financial benefits of the account.
December 31, 2023 Deadline:
As the year comes to a close, it’s important to remember that the deadline for contributing to your FHSA for the current tax year is December 31, 2023. If you haven’t maxed out your contributions or started an account yet, now is the time to act! Making contributions before the deadline ensures that you can take full advantage of the tax benefits for the current year. While there is a carryforward option it is only limited to 1 year. It is recommended that if you can take advantage of the $8,000 contribution limit you do so in each tax year!
How to Contribute:
- Check Contribution Limits: Be aware of the annual contribution limits for FHSA ($8,000 per year to a life time limit of $40,000). Understanding these limits ensures that you maximize your savings while staying within the prescribed boundaries.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html - Review Eligibility: Confirm your eligibility for FHSA contributions. Typically, these accounts are available to individuals who have not owned a home in the past or have not owned one within a specified time frame.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-closing-and-fhsa.html - Contact Your Financial Institution: If you don’t have an FHSA yet, get in touch with your financial institution to set one up. If you already have an account, confirm the contribution process and any additional details.
The First Time Home Buyers Savings Account is a valuable resource for those on the path to homeownership. With the December 31, 2023 deadline approaching, now is the time to take action. By contributing to your FHSA before the end of the year, you not only maximize your potential tax benefits but also bring yourself one step closer to unlocking the door to your dream home.
If you need a referral to a financial planner or require any assistance with your mortgage pre-approval, please contact us today!