“If advisors are working with their established clients who are worried about the down payment for their kids’ home, they can advise them to put the money into a FHSA to get it working for them rather than just giving them the money to put in their taxable account. That will also teach them financial literacy, and they can build on that money.”
Bezaire also recommended advisors discussing house buying with their clients or their children before they jump in as as house prices could cool even more yet.
In order to use the plan, the young people must be over 18, a resident of Canada, and not have owned a home. While the FHSA has some similarities to the federal government’s current Home Buyers’ Plan, Bezaire says it provides more advantages.
“The original Home Buyers’ Plan allows you to build up your RSP and then borrow from yourself, up to $35,000 tax-free, for your first home. But, you have to pay it back over a 15-year period or you’ll get taxed on the money,” she said.
With the new FHSA, she noted that people can contribute up to $8,000 a year in order to save $40,000 – rather than $35,000 – for their first home. The money can be held tax-free in the account for 15 years.
