In its first year, over 500,000 individuals have signed up for the First Home Savings Account in Canada. However, a personal finance expert has suggested that a larger awareness campaign could help even more people benefit from the program.
All About First Home Savings Account in Canada
The First Home Savings Account in Canada (FHSA) was launched on April 1, 2023, and helps individuals who have not owned a home in the last four years to save for a down payment.
The First-Home Savings Account in Canada allows for maximum annual contributions of $8,000, totaling $40,000. Contributions are tax-deductible, similar to a Registered Retirement Savings Plan (RRSP), and the interest earned is tax-exempt, like a Tax-Free Savings Account (TFSA).
Cindy Marques, a certified financial planner and director at Open Access Ltd., said the FHSA’s first year has been quite successful. Additionally, she believes that clients have been satisfied with the accounts.
She added that the First Home Savings Account in Canada is a good way to push Canadians to save for a home, with improved tax incentives in a recent phone interview with BNNBloomberg.ca.
Chrystia Freeland, the Finance Minister in January, said that today’s market requires a down payment exceeding $40,000, but the First Home Savings Account in Canada is a start that is better than the amount allowed in the home buyer’s plan.
She announced that over 500,000 Canadians had opened a FHSA within the program’s first nine months.
She said on January 11 that more than half a million Canadians are getting closer to holding those first keys to their own place.
FHSA’s First Year
Even though the First Home Savings Account in Canada has stated that it is essential to review the improvements made in FHSA’s first year of operation.
Although many have already signed up within FHSA’s first year, Marques believes more people could open an account if they knew its benefits and eligibility criteria.
She added that she is well aware of the general lack of knowledge about these accounts, and it is not surprising that many are familiar with the acronym but aren’t clear about its workings, eligibility, or appeal.
She stressed the word “first home” as a hurdle for Canadians who have owned a home before and assume they no longer qualify. These accounts are open to anyone who hasn’t owned a home in the past four calendar years.
She said that a person could be a homeowner right now, and then after four years, they can meet the criteria of a first-time home buyer. For example, if a person sells their home and neither they nor their common-law partner owns one, they are once again considered a first-time home buyer and can be qualified for a First Home Savings Account in Canada.
Questrade, the sole financial institution that introduced the First Home Savings Account in Canada within FHSA’s first year, has started experiencing high demand for the product. Rob Galaski, Questrade’s chief journey officer, said that the number of people opening accounts with them is in the tens of thousands within FHSA’s first year.
In a recent phone interview with BNNBloomberg, he said that they are witnessing a consistent interest among young Canadians in exploring how they can utilize this product to achieve home ownership.
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