First Home Savings Account
The 2023 Canadian budget announcement was the official launch of the new Tax-Free First Home Savings Account (FHSA). The option was first proposed in the 2022 federal budget. However, Canadian financial institutions will start implementing it as of 1st April 2023.
The account allows first-time home buyers to save up to $40,000 for a property purchase completely tax-free. However, account holders can only contribute a maximum of $8,000 per year. The contributions to the account are tax-deductible, and the withdrawals to purchase property for the first time will also be tax-exempt similar to a tax-free savings account.
The First Home Savings Account is a Canadian government initiative that helps Canadians be able to buy their first home as it makes making a down payment much easier. The Canadian government estimates that the FHSA will provide $725 million in first-home purchase support over the next five years.
Requirements to be eligible for the account include:
- Be a resident of Canada
- Be at least 18 years old
- Be a first-time home buyer
The First Home Savings Account can stay open for up to fifteen years or until the end year when the account holder turns 71. The account can also stay open until a participant makes a qualifying withdrawal from the FHSA for the first home purchase. Whichever of the three comes first.
Housing Prices In Canada
The Canadian Real Estate Association (CREA) states that the average home price in Canada was $662,437 as of February 2023. That represents a nineteen percent decrease from the all-time high home prices of February 2022.
Also, statistics show that there has been a two percent increase in home sales in Canada from February to March 2023. However, newly listed properties have decreased by eight percent.
The prices of houses in Canada are mixed in March 2023. According to CREA, higher interest rates have increased borrowing costs and led to the reduction of real estate prices.
Home prices in places like Alberta, and Saskatchewan have been more stable than in other parts. Forecasts say that home prices in Canada will decline by about six percent by the end of the year.