Life events and taxes
Saving for the first home
Alex and Neena have always had big dreams, and now, with steady careers and a strong relationship, they’re ready to take the next step: buying their first home. With an eye on the future, they’ve both been contributing regularly to their Registered Retirement Savings Plan (RRSP) and their First Home Savings Account (FHSA), two key tools that are helping make their dream possible.
Save on taxes while saving for the first home
Over the past five years, the couple has been budgeting carefully and contributing to both their FHSAs and RRSPs. Their contributions are growing tax-free and helping reduce their taxable income.
They know they can take advantage of the Home Buyers’ Plan (HBP), which allows each of them to withdraw up to $60,000 from their RRSPs, tax-free.
Between their FHSAs and the HBP, Alex and Neena are ready to make their move. After a lot of research and number-crunching, they’ve saved enough for a down payment on a modest home with two bedrooms and are ready for their future family!
Home buying time for Alex and Neena – a deeply satisfying, happy moment for the couple, who have been diligently saving up.
Takeaways for first-time home buyers
- Use the FHSA and HBP together
- Combine the benefits of the FHSA and RRSP withdrawals through the Home Buyers’ Plan to boost your down payment.
- Reduce your taxes while you save
- Contributions to the FHSA and RRSP can lower your taxable income
- Stick to the rules
- Repay HBP withdrawals to your RRSP over 15 years to avoid extra taxes. You must be a first-time home buyer to use the FHSA and HBP—so check eligibility before you start.
- Plan early
- The earlier you contribute, the more time your savings have to grow tax-free.