{"id":6941,"date":"2024-05-21T10:36:00","date_gmt":"2024-05-21T17:36:00","guid":{"rendered":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/?p=6941"},"modified":"2024-05-27T13:22:22","modified_gmt":"2024-05-27T20:22:22","slug":"discover-the-fhsa","status":"publish","type":"post","link":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/articles\/discover-the-fhsa\/","title":{"rendered":"Discover the FHSA Advantage: Your Kids and Grandkids&#8217; Pathway to Homeownership"},"content":{"rendered":"<div class=\"cta\" style=\"background-image: url(https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2022\/01\/Asset-4.png);\"\r\n>\r\n    <button id=\"cta-close\" aria-label=\"Close CTA\"><\/button>\r\n    <div class=\"cta__content\">\r\n                    <a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/retirement-planning-ebook\/\" target=\"_self\">\r\n                        <h2><strong>Download Our Free Retirement Guide today<\/strong><\/h2>\n        <span>Learn More<\/span><\/a>    <\/div>\r\n<\/div>\r\n\n\n\n<p class=\"wp-block-paragraph\">This article was reviewed by&nbsp;<a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/about-us\/jay-brecknell\/\">Jay Brecknell, CFP\u00ae<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Have you found yourself worried about whether or not your kids (or grandkids) will ever be able to own their own home? We get it, it\u2019s a common concern at the moment, given the economic climate and the real estate crisis we\u2019re currently facing in British Columbia and across Canada.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s true that homeownership costs have eased since BC\u2019s record peak in 2022, but costs remain high and recent reports are showing a surge in housing expenses, leaving many would-be first-time buyers feeling uneasy. With rising housing costs in 2024 (values increasing by 0.6 percent) and higher mortgage rates, homeownership is becoming increasingly challenging.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, what can you do to help the people in your life realize their dreams of homeownership? You can open doors and help your <a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/articles\/opening-doors-to-homeownership-how-parents-can-assist-their-kids-in-buying-a-home\/\">kids or grandkids buy a home<\/a> when they\u2019re ready to buy, or you can educate them before it\u2019s time to buy about ways to save and help them if it\u2019s in your means to do so\u2014and we have a great tip for you.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"2560\" height=\"1707\" src=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-scaled.jpg\" alt=\"\" class=\"wp-image-6969\" srcset=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-scaled.jpg 2560w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-300x200.jpg 300w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-1024x683.jpg 1024w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-768x512.jpg 768w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-1536x1024.jpg 1536w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-2048x1365.jpg 2048w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_434384748-800x533.jpg 800w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Last year, the Government of Canada launched the First Home Savings Account (FHSA), and this little-known savings account is here to reduce barriers to entry and help first-time buyers get into the housing market. If you have someone in your life who could benefit from this opportunity and are seeking ways to support their entry into the market, read on:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>WE\u2019RE GOING TO COVER<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What is an FHSA&nbsp;<\/li>\n\n\n\n<li>Who qualifies<\/li>\n\n\n\n<li>Contribution limits&nbsp;<\/li>\n\n\n\n<li>Tax deductions for FHSA contributions<\/li>\n\n\n\n<li>Using an RRSP and FHSA<\/li>\n\n\n\n<li>Closing an FHSA<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is an FHSA?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Simply put, an FHSA is a registered plan allowing prospective first-time home buyers to save for their first home. But if you dig a little deeper, you\u2019ll find it\u2019s the key to financial flexibility on the journey to homeownership.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Picture this: a savings plan designed to empower first-time buyers, offering up to $40,000 in tax-free savings ($8,000 contributed annually) toward your dream home. Just like a Registered Retirement Savings Plan (RRSP), contributions are tax-deductible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While it may seem straightforward to stash away $8,000 annually for five years, the real benefit begins when you kickstart your contributions. The clock starts ticking when you put your money in and you can\u2019t accelerate it, so the important thing is to start. And always remember; you can\u2019t create room for growth until you actually invest.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-1024x683.jpg\" alt=\"\" class=\"wp-image-6959\" srcset=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-1024x683.jpg 1024w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-300x200.jpg 300w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-768x512.jpg 768w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-1536x1024.jpg 1536w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-2048x1365.jpg 2048w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_418984784-800x533.jpg 800w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Who can open an FHSA? <\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">If you&#8217;re in the know, skip ahead, but for those of you who aren&#8217;t, you have to meet the following criteria to open an FHSA:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You are 18 years old in BC, or of a legal age in your province or territory.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/first-home-savings-account\/opening-your-fhsas.html\">You are 71 years or younger as of December 31 of the year you open your FHSA.<\/a><\/li>\n\n\n\n<li>You are a Canadian resident.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/first-home-savings-account\/opening-your-fhsas.html\">You did not live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that you owned or jointly owned in this calendar year or in the previous 4 calendar years.<\/a><\/li>\n\n\n\n<li>One of the following is true:\n<ul class=\"wp-block-list\">\n<li>You did not live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that your spouse or common-law partner owned or jointly owned in this calendar year or in the previous 4 calendar years.<\/li>\n\n\n\n<li>You do not have a spouse or common-law partner at the time you open the account.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-blue-color has-text-color has-link-color wp-elements-1\">Yes, you read that right.<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If you haven&#8217;t owned a home for four years, you can requalify for the first-time home savings account. Many people overlook this, so it&#8217;s valuable information to keep in mind. For a deep dive into eligibility and qualification information, check out more <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/first-home-savings-account\/opening-your-fhsas.html\">here<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Tax deductions for FHSA contributions<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Once you get the ball rolling, savings grow tax-sheltered. Every dollar invested is tax-deductible, just like an RRSP. And the best part? You don&#8217;t have to use the deduction right away; you just have to claim the amount. You can hold off until you&#8217;re in a higher tax bracket to maximize your benefit.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can think of it this way: all contributions are tax-deductible, just like an RRSP, and your qualifying withdrawals are non-taxable just like a TFSA.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-1024x576.jpg\" alt=\"\" class=\"wp-image-6960\" srcset=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-1024x576.jpg 1024w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-300x169.jpg 300w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-768x432.jpg 768w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-1536x864.jpg 1536w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-2048x1152.jpg 2048w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_245181120-800x450.jpg 800w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Can you use your RRSP and FHSA?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When the time comes to make that first-time home purchase, it can be withdrawn from your FHSA tax-free&nbsp;AND you can tap into your RRSP through the Home Buyers&#8217; Plan. Yes, that\u2019s right\u2014both can be used to save and used to buy a home.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Carry-forward contributions<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Remember, starting is the most important thing. If you can only contribute $500.00 out of the $8,000.00 annual limit, do it\u2014maybe next year you can contribute more. If this sounds like you, you\u2019re going to want to pay attention to carry-forward contributions.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You are allowed to carry forward your unused annual contribution limit up to a maximum of $8,000. This means that if you contribute less than $8,000 in a given year, you can contribute the unused amount in a subsequent year on top of your annual contribution limit of $8,000 (subject to your lifetime contribution limit).&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, if you contribute $5,000 to your FHSA in 2024, you\u2019ll be allowed to contribute $11,000 in 2025 (i.e., $8,000 for 2025, plus the remaining $3,000 from 2024).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Carry-forward amounts only start accumulating after you open an FHSA for the first time<\/strong>. As such, if you\u2019re a first-time home buyer, you could consider opening an FHSA immediately, even if you don\u2019t have the funds to contribute. As an example, if you open an account in 2024 but only have the funds to contribute to the FHSA in 2025, you\u2019d be able to contribute up to $16,000 ($8,000 annual contribution room from 2025, plus $8,000 carried forward contribution room from 2024) in 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The fine print<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You have to use your FHSA contributions within 15 years of opening the account, or by the time you turn 71 years old, whichever comes first. If you don\u2019t, you can transfer savings into an RRSP or RRIF or make a taxable withdrawal.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-1024x683.jpg\" alt=\"\" class=\"wp-image-6963\" srcset=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-1024x683.jpg 1024w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-300x200.jpg 300w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-768x512.jpg 768w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-1536x1024.jpg 1536w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-2048x1365.jpg 2048w, https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-content\/uploads\/2024\/05\/AS_302146541-800x533.jpg 800w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Summary<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">First-time home buyers need to take advantage of every opportunity available to them in order to break into the housing market. Understanding, opening, and contributing to an FHSA could make all the difference on the path towards homeownership, and sharing this knowledge with your kids or grandkids could help them on their way.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To maximize saving for a home, first-time homeowners can use FHSA, TFSA, and the RRSP Home Buyer&#8217;s Plan. Talk to us for more details and if you have any questions about FHSAs or how they could help your family or someone you know, <a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/contact\/\">we\u2019re here to answer your questions.<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key takeaways<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Housing costs have cooled a bit since 2022 but are trending upwards again, posing challenges for first-time buyers.<\/li>\n\n\n\n<li>The First Home Savings Account (FHSA), introduced by the Canadian government, offers a solution.<\/li>\n\n\n\n<li>FHSA enables individuals to save up to $40,000 tax-free, potentially growing to $75,000 when combined with the Home Buyers&#8217; Plan.<\/li>\n\n\n\n<li>It also provides tax deductions akin to RRSPs and allows for integration with RRSPs when purchasing a home.<\/li>\n\n\n\n<li>The time limit for utilizing FHSA funds, either within 15 years of opening or by age 71.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Resources for the first-time home buyer in your life<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/articles\/opening-doors-to-homeownership-how-parents-can-assist-their-kids-in-buying-a-home\/\">Opening Doors to Homeownership: How Parents Can Assist Their Kids in Buying a Home<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/cedarrockfinancial.com\/tmp\/staging\/articles\/need-a-hand-up\/\">Need a Hand Up?<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Last year, the Government of Canada launched the First Home Savings Account (FHSA), and this little-known savings account is here to reduce barriers to entry.<\/p>\n","protected":false},"author":2,"featured_media":6958,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4,12],"tags":[],"class_list":["post-6941","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-planning","category-personal-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/posts\/6941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/comments?post=6941"}],"version-history":[{"count":33,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/posts\/6941\/revisions"}],"predecessor-version":[{"id":6996,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/posts\/6941\/revisions\/6996"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/media\/6958"}],"wp:attachment":[{"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/media?parent=6941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/categories?post=6941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cedarrockfinancial.com\/tmp\/staging\/wp-json\/wp\/v2\/tags?post=6941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}