Great news, the new Tax-Free First Home Savings Account is expected to be available this coming April 2023! It has the benefits of an RSP with a tax deduction combined with the benefits of TFSA (since withdrawals are not taxable) all while your money grows completely tax-free. Now if you don’t buy a home within 15 years, you can either:

  1. Take the money and pay tax based on your tax rate at the time or
  2. Move the money into your RSP and use it for retirement.

The product is only for 1st time home buyers who are defined as someone who does not currently own a home or hasn’t owned a home in the past 4 calendar years.

The maximum contribution is $8K per year, up to $40K.

So, parents could potentially gift their children $8K/year to fund this account. Remember to be nice to your parents 😊

Even if you never end up buying, you have created $40K in extra RSP room. And, to top it all off, you can even use this tax-free First Home Savings Account with the existing program, the Homebuyer plan which allows you to borrow $35K from your RSPs.

I honestly cannot see a downside! If you know anyone who could use more information on the new Tax-Free First Home Savings Account, send them to Lotus Loans & Mortgages Corp.