Combine your FHSA and your RRSP!
Did you know that you can leverage
two tax tools at once when you buy a house? Indeed, the smart pairing of an FHSA and an RRSP helps you build savings for your down payment, tax-free with the FHSA, or without immediate tax consequences through a withdrawal from your RRSP under the Home Buyers' Plan (HBP). You don’t need to choose between the two: together, the funds from both plans can make up your down payment.
This smart homebuying strategy is particularly relevant when the housing market favours sellers and the cost of living continues to rise.
Let's face it: saving enough for a down payment can feel daunting: you'll need to have at least 5% of the purchase price (if it doesn't exceed $500,000), while the median price of a single-family house stands at $523,250, according to the latest data from the Quebec Professional Association of Real Estate Brokers (QPAREB).
Great news! Here's some useful information on two savings plans that can certainly help make your "home" dream more attainable.
FHSA: the basics
- Maximum contribution of $8,000 per year while you have your first FHSA / $40,000 lifetime limit;
- Tax-deductible contributions;
- Tax-free withdrawals if used for an eligible first home purchase;
- Opportunity to carry forward unused contribution room;
- Account must be closed by the earliest of the following: 15 years after opening, in the year you turn 71, or by the end of the year following your first qualifying withdrawal — with any remaining funds eligible for transfer to an RRSP or RRIF.
HBP: the basics
- Allows withdrawals of up to $60,000 from an RRSP without immediate tax consequences to buy or build an eligible home;
- It’s essentially a loan to yourself, giving you 15 years, beginning at the end of the grace period, to repay the amount withdrawn to your RRSP; for HBP withdrawals made between 2022 and 2028, the grace period is five years, giving you nearly 20 years in total to complete repayment of an HBP withdrawal made between 2022 and 2028.
You can also refer to the Canada Revenue Agency (CRA)’s pages regarding the
FHSA and the
HBP for other key information, such as the various applicable deadlines.
Meet Vincent, a savvy 28-year-old saver
Vincent dreams of having a home of his own and is looking for the best way to get there.
He decides to contribute $8,000 per year to an FHSA for 5 years, reaching his $40,000 lifetime limit. The amount he saves up, including whatever growth the investment may have generated, will come out tax-free when he buys his first home. He knows that the earlier he starts putting money into it, the more this asset could grow over time, tax-free.
He has also added $30,000 to his RRSP since he began working, with the aim of taking advantage of the HBP as soon as possible (not to mention properly planning for retirement).
With these two savings solutions to carry out his home-buying plan, knowing that he must qualify for the mortgage and be able to cover the other closing costs, Vincent could therefore have up to $70,000 (not counting the potential return) available for his down payment!
It's a promising scenario, and of course, if he sets aside a smaller amount based on his means, he knows that several appealing types of properties remain within his reach.
Two plans, one goal!
For future homeowners, combining certain solutions can play a key role in an effective savings strategy. Have a look at our pages about the
RRSP and the
FHSA to learn more and enrol. Start maximizing your savings right now to bring your homeownership dream to life. Contact our Member Services Centre, we'll be happy to help with any questions.
Combine your FHSA and your RRSP!
Did you know that you can leverage two tax tools at once when you buy a house? Indeed, the smart pairing of an FHSA and an RRSP helps you build savings for your down payment, tax-free with the FHSA, or without immediate tax consequences through a withdrawal from your RRSP under the Home Buyers’ Plan (HBP). You don’t need to choose between the two: together, the funds from both plans can make up your down payment.
This smart homebuying strategy is particularly relevant when the housing market favours sellers and the cost of living continues to rise.
Let’s face it: saving enough for a down payment can feel daunting: you’ll need to have at least 5% of the purchase price (if it doesn’t exceed $500,000), while the median price of a single-family house stands at $523,250, according to the latest data from the Quebec Professional Association of Real Estate Brokers (QPAREB).
Great news! Here’s some useful information on two savings plans that can certainly help make your “home” dream more attainable.
FHSA: the basics
- Maximum contribution of $8,000 per year while you have your first FHSA / $40,000 lifetime limit;
- Tax-deductible contributions;
- Tax-free withdrawals if used for an eligible first home purchase;
- Opportunity to carry forward unused contribution room;
- Account must be closed by the earliest of the following: 15 years after opening, in the year you turn 71, or by the end of the year following your first qualifying withdrawal — with any remaining funds eligible for transfer to an RRSP or RRIF.
HBP: the basics
- Allows withdrawals of up to $60,000 from an RRSP without immediate tax consequences to buy or build an eligible home;
- It’s essentially a loan to yourself, giving you 15 years, beginning at the end of the grace period, to repay the amount withdrawn to your RRSP; for HBP withdrawals made between 2022 and 2028, the grace period is five years, giving you nearly 20 years in total to complete repayment of an HBP withdrawal made between 2022 and 2028.
You can also refer to the Canada Revenue Agency (CRA)’s pages regarding the FHSA and the HBP for other key information, such as the various applicable deadlines.
Meet Vincent, a savvy 28-year-old saver
Vincent dreams of having a home of his own and is looking for the best way to get there.
He decides to contribute $8,000 per year to an FHSA for 5 years, reaching his $40,000 lifetime limit. The amount he saves up, including whatever growth the investment may have generated, will come out tax-free when he buys his first home. He knows that the earlier he starts putting money into it, the more this asset could grow over time, tax-free.
He has also added $30,000 to his RRSP since he began working, with the aim of taking advantage of the HBP as soon as possible (not to mention properly planning for retirement).
With these two savings solutions to carry out his home-buying plan, knowing that he must qualify for the mortgage and be able to cover the other closing costs, Vincent could therefore have up to $70,000 (not counting the potential return) available for his down payment!
It’s a promising scenario, and of course, if he sets aside a smaller amount based on his means, he knows that several appealing types of properties remain within his reach.
Two plans, one goal!
For future homeowners, combining certain solutions can play a key role in an effective savings strategy. Have a look at our pages about the RRSP and the FHSA to learn more and enrol. Start maximizing your savings right now to bring your homeownership dream to life. Contact our Member Services Centre, we’ll be happy to help with any questions.
