New tax-free first home savings account for Canadians, to help reach home ownership faster

CITYnews halifax\ By News Staff

MONTREAL – As house prices continue to climb, saving for a down payment is out of reach for many Canadians, particularly young people – says the federal government.

“The new tax-free First Home Savings Account is available and helping put home ownership back within reach of Canadians across the country,” says Marc Miller, Minister of Immigration, Refugees and Citizenship, in a statement.

It’s a registered savings account that helps Canadians become first-time home buyers by contributing up to $8,000 per year (up to a lifetime limit of $40,000) for their first down payment within 15 years.

“To help Canadians reach their savings goals, First Home Savings Account contributions are tax deductible on annual income tax returns, like a Registered Retirement Savings Plan (RRSP). Like a Tax‑Free Savings Account, withdrawals to purchase a first home, including any investment income on contributions, are non-taxable. Tax-free in; tax-free out.”

Financial institutions have been offering the First Home Savings Account to Canadians since April 1, 2023, and it’s now available at seven financial institutions, with more set to offer it soon.

“Homeownership has long been a cornerstone of our dream, our Canadian dream symbolizing stability, security and a place to call your own,” said Miller in Montreal, making the announcement.

Home Savings Account announcement with Marc Miller, Minister of Immigration, Refugees and Citizenship in Montreal. Aug. 11, 2023 (CREDIT: Matt Tornabene, CityNews Image)

“While the First Home Savings Account seeks to address housing affordability, it’s also essential for the Government of Canada to help homebuilders hire the workers they need to put shovels in the ground.”

“With provinces needing workers to meet housing demands and the home building sector facing immense challenges in acquiring talent, it is crucial for immigration to be factored into the overall approach, as newcomers are an undeniable part of the solution,” added Miller.