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New Government Housing Budget

April 12, 2022

The rising inflation today is because of the low interest rates, global supply shortages, conflicts in Ukraine and people wanting to spend their money after being holed up from the pandemic. The housing budget was released by the government and we will point out which ones may be beneficial to you.

For brand new buyers there is now a Tax-Free First Home Savings Account (FHSA) that gets you a tax deduction for contributions, as with a registered retirement savings plan. With this, you benefit from a tax-free compounding inside the account and tax-free withdrawals to buy a home. 

Now that this new account is introduced, it may be best to use the FHSA first, contribute the maximum amount of $40,000 and then move on to a TFSA. Take note that you cannot use both a FHSA and the federal Home Buyers’ Plan for the same home purchase. The difference is that a HBP allows you to withdraw up to $35,000 tax-free from an RRSP to buy a first home. 

A competition among the financial firms has already begun in who will be introducing first-time home accounts and what investment options they offer. Let the games begin!

Here are some of the ones we want to highlight: