'First Home Savings Plan' - Update | General financial discussion | Discussion forum

The limits seem high enough, given how super generous this scheme really is. A couple pays zero tax on 80K (say a $40K handout) AND never has to pay a dollar in taxes on investment returns.

Anyone eligible should be “at the ready” to get in on the deal the moment its available.

Nelson said
Which financial institutions are currently offering the FHSA? Best to go with ones offering the highest rates.  

EQ Bank has an FHSA, as does Questrade and, perhaps, Questwealth Portfolios, too. Some robo-advisors may also have them. Scotiabank has an FHSA, as does RBC Royal Bank. I see BMO Bank of Montreal's does not launch until November. For me, I went with a Scotiabank FHSA, mainly so I could get the tax deduction; less so for the tax-free growth, even though I'll only get to use $8,000-16,000 of it until my studio condo purchase closes. They are offering 5.0% through January 31, 2024. They said Scotia iTRADE will launch an FHSA by year-end.

That said, I agree mostly with RetirEd that it's highly gimmicky.

Cheers,
Doug

If you decide not to purchase a home with the money in your FHSA (maybe you've inherited a house, decided to rent instead, etc.), the funds can be transferred into an RRSP or an RRIF without penalty or affecting your contribution room. In opening an FHSA, you could create $40,000 max in RRSP contribution room. Another tax-shelter worth considering, providing you meet the definition of a first-time home buyer. Will there be a chart in the future listing the financial institutions offering the FHSA and their posted rates?

Nelson said
If you decide not to purchase a home with the money in your FHSA (maybe you've inherited a house, decided to rent instead, etc.), the funds can be transferred into an RRSP or an RRIF without penalty or affecting your contribution room.

This is a great bonus to an FHSA, but IMO this makes the program too enticing for homeowners to try and cheat the program to bulk up their RRSPs.

Hello,
I'm confuse with FHSA contribution room. I thought it use/share the same RRSP room but it seem I was wrong.

So does anyone has same extra 8k/40k FHSA contribution room/limit regardless of their RRSP room?

For example, if I 5k RRSP room this year, I can contribute 5k to RRSP and 8k to FHSA and claim both? And that is same effect as total 13k RRSP contribution claim even though I had only 5k room.

Dennis said
So does anyone has same extra 8k/40k FHSA contribution room/limit regardless of their RRSP room?

Yes, this is all in addition to RRSP room! It has the benefits of an RRSP on contribution, and TFSA on withdrawal if used for a down payment. Which will really help home buyers. If not used in 15yrs from opening, it will be merged into RRSP - which I predict more FHSAs will go this route than to down payments.

RetirEd said
Everything that subsidizes home purchases just drives up the costs...  

You might get back extra $4,000 from FHSA contribution in a year if you are in the high tax bracket. Most will get less than $2,500. Have you checked real estate prices lately? For a mortgage on a mediocre house in a half-decent neighborhood, $2,500-$4,000 is not even a drop in the backet.

Besides, most will either dismiss FSHA as a gimmick it is, or use it as an extra RRSP contribution room.
Waiting 5 years to collect about $12,000 in extra tax refunds before buying a house? Right...

Alexandre said

You might get back extra $4,000 from FHSA contribution in a year if you are in the high tax bracket. Most will get less than $2,500. Have you checked real estate prices lately? For a mortgage on a mediocre house in a half-decent neighborhood, $2,500-$4,000 is not even a drop in the backet.

Besides, most will either dismiss FSHA as a gimmick it is, or use it as an extra RRSP contribution room.
Waiting 5 years to collect about $12,000 in extra tax refunds before buying a house? Right...  

You are missing tax-free growth of capital and the dividends. Nor am I sure where “most” would fall on the tax scale.

Apparently the point of this remarkable tax handout / break isn’t lost on “most” eligible individuals. Banks are reporting that the early uptake has been “phenomenal”.

Anecdotally, both of my sons and their partners have maxed their contributions. They are young, with decent salaries. My (conservative) estimate is that each couple will have north of 100K in these accounts in 5 years. Its a nice incentive to buy a house. They might not wait 5 years if house prices drop… Who knows?

Alexandre said

mordko said

Anecdotally, both of my sons and their partners have maxed their contributions. They are young, with decent salaries. My (conservative) estimate is that each couple will have north of 100K in these accounts in 5 years. Its a nice incentive to buy a house.

$80K of that money is what they deposited over the course of 5 years. So, it is an extra $20K from capital gain, and out of that money only tax part is their gain vs. non-FHSA, which is probably close to just $6K. For 5 years. For two people.

Maybe it is really all about psychological factor: 5 years from now that couple will look at their $100K FHSA account and say "It's a nice incentive to buy a house."
Even if $94K of that money was their without an FHSA.  

Capital gain and dividends. And, of course, its the gains and dividends on tax deductions too. Otherwise these would have been with CRA rather than invested. And once they buy houses, capital gains in the house are also tax free. Life time tax-free gains will be quite something.

I think its a stunning deal; contrary to the whole ideology of tax perks. Combines the best features of TFSA and RRSP. A massive incentive to buy rather than rent. $94K wouldn’t have been there without FHSA, no. One has to assume that FHSA tax deductions also get invested in something nice; perhaps within a TFSA wrapper. FHSA expands the overall amount a middle class couple can shelter from tax in a doubly advantageous way.