Nearly 1 Million Canadians Saving for Their First Home with a Tax-Free First Home Savings Account
Ottawa, ON – November 6, 2024 – The Canada Revenue Agency (CRA) has announced that nearly 1 million Canadians have opened a Tax-Free First Home Savings Account (FHSA) since its launch in April 2023.
The FHSA is a registered savings account that allows first-time homebuyers to save up to $40,000 tax-free for a down payment on their first home. Contributions to the FHSA are not tax-deductible, but withdrawals for the purpose of purchasing a first home are tax-free.
According to the CRA, the average FHSA balance is $10,000. Nearly half of FHSA holders are between the ages of 25 and 34, and the majority (60%) live in Ontario and British Columbia.
The FHSA has been praised by housing advocates as a valuable tool for first-time homebuyers.
“The FHSA is a game-changer for first-time homebuyers,” said Paul Kershaw, a professor of public policy at the University of British Columbia. “It provides a significant amount of tax-free savings that can help people overcome the barrier of a down payment.”
However, some critics argue that the FHSA does not do enough to address the affordability crisis in the housing market.
“The FHSA is a helpful start, but it is not a silver bullet,” said David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives. “We need to build more affordable housing and implement policies that prevent speculation and foreign ownership.”
The federal government has announced a number of other measures to help first-time homebuyers, including:
- The First-Time Home Buyer Incentive: This program provides a shared equity mortgage with the government.
- The Home Buyers’ Plan: This program allows first-time homebuyers to withdraw up to $35,000 from their RRSPs tax-free.
- The Land Transfer Tax Rebate: This rebate reduces or eliminates the land transfer tax for first-time homebuyers in Ontario and British Columbia.
These measures are intended to help first-time homebuyers overcome the financial barriers to homeownership.
Nearly 1 million Canadians saving for their first home with a Tax-Free First Home Savings Account
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