The alphabet soup of investment savings accounts for Canadians looking to buy their first home can seem daunting. Experts say each have their advantages — and limits.
Contributions to an FHSA will be tax-deductible, like with an RRSP. Withdrawals from an FHSA, including capital gains, to buy a home will be non-taxable — similar to a tax-free savings account. “The first home savings account is going to be the better plan for the majority of people,” Cestnick said. That last allowance also goes the other way, as RRSP holders can transfer cash to the FHSA without being taxed on the withdrawal.
The first home account also makes sense for properties that fall far below the average home price in Metro Vancouver or the Greater Toronto Area — $1.36 million and $1.30 million respectively in March — says Sung Lee, a mortgage expert with Ratesdotca. An alternate route is renovating the residence to boost its value, especially since gains on the sale are tax-exempt, he noted.
Thanks for interviewing RATESDOTCA mortgage expert, Sung Lee, for this piece!
dmrider Step 1: Have parents who own a home Step 2: Ask them to loan or gift you a downpayment Step 3: If step 2 doesn't work, wait for said parents to die; use inheritance to make downpayment An easy 3-step method anyone under 40 can use to purchase a home of their very own in Canada.
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