Canadian Government Launches New Savings Account to Aid First Time Homebuyers as Real Estate Prices Expected to Drop
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The Canadian Real Estate Association (CREA) has predicted that the average price of a home in Canada will decrease by 4.8% by the end of 2023, making it more affordable for Canadians, including new immigrants. To further aid first-time homebuyers, the Canadian government has launched a tax-free First Home Savings Account (FHSA) that allows eligible Canadian citizens and permanent residents to save up to $40,000 for their first home. The FHSA contributions are tax-deductible, and withdrawals for the purchase of a first home are non-taxable. The government has projected that the FHSA will provide $725 million in support over the next five years. In addition to the FHSA, the Canadian government offers other benefits for first-time homebuyers, including the First-Time Home Buyer Incentive (FTHBI), which offers eligible Canadians five or ten percent of a home's purchase price to use as a down payment, and the Home Buyers’ Plan (HBP), which allows first-time homebuyers to withdraw up to $35,000 in tax-free dollars from their RRSP. Many provinces and territories across Canada also offer their unique grants and incentives for first-time homebuyers, such as British Columbia’s First-Time Home Buyers’ Program, Ontario’s Land Transfer Tax Refunds for First-Time Homebuyers, and Nova Scotia’s First-Time Home Buyers’ Rebate Program.
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