The First Home Savings Account (FHSA), is a new program that aids prospective homebuyers in saving for a down payment tax-free.
The Royal Bank of Canada says that “tens of thousands” of accounts have been opened since the program came into effect on April 1.
The interest is mostly coming from younger Canadians who are looking to build a down payment for their first home
Clients between the ages of 25 and 34 make up the largest portion of RBC FHSA holders at 56 per cent. Those aged 35 to 44 make up 20 per cent, those between 18 and 24 make up 18 per cent, and clients 45 and older make up 6 per cent.
RBC says that 26 per cent of those with an FHSA account have already contributed to all or most of the $8,000 maximum annual amount. Holders can save up to 15 years and there is a lifetime contribution limit of $40,000.
An FHSA account can also be claimed as a tax deduction and can be withdrawn tax-free. Any unused portions of the annual limit can be carried to the next year up to a maximum of $8,000. Any unused savings can be transferred to an Registered Retirement Savings Plan (RRSP).
