There was a provision in the recent federal budget that didn’t get much in the way of headlines but is probably the most important development in years for those looking to get their first home.
It is called the First Home Savings Account or FHSA. Not surprisingly, all the banks wrote this thing up because they see its importance and are going to be setting up these accounts for their clients.
Basically, it brings together the best of both the RRSP and the TFSA. Contributions into the account are tax deductible like an RRSP but withdrawal is tax free like a TFSA so any growth is sheltered, freeing up the maximum amount of capital for a down payment on a first home.
This is reminiscent of a concept developed by the legendary Singaporean leader, Lee Kwan Yew, a man sometimes described as a benevolent dictator, who figured home ownership was the primary vehicle for wealth accumulation for the average family. That belief prompted him to create a mandatory home ownership account for every citizen.
