Please log in to bookmark this story.My family went to a local pizza place last weekend.I tried the healthy cauliflower crust pizza – which was surprisingly good. Our conversation turned to saving for the future and my 25-year-old daughter said: “Dad, I don’t know if I’ll ever be able own a home.” She was discouraged. I said: “Sarah, I have just one thought for you: If cauliflower can become a pizza, you can become a homeowner. Believe it.”We then talked about the tax-free first home savings account (FHSA) which all my kids have opened. Let me share some of the FHSA ideas we discussed over dinner.1. Use an RRSP tax refund to contribute to your FHSASome people debate whether to contribute to an RRSP or a FHSA. Why not do both? Contribute to your RRSP, then use the tax savings to contribute to your FHSA.You have until March 3, 2025, to make your 2024 RRSP contribution. After filing your tax return for 2024, take your tax savings from the RRSP contribution, which will often come back as a refund, and contribute those dollars to your FHSA for 2025.FHSA contributions must be made in the calendar year to claim the deduction for that year; you can’t contribute to an FHSA for 2024 in the first 60 days of 2025 as you can with your RRSP.2. Transfer funds from your RRSP to your FHSAIf you have RRSP assets that can help to buy a home, you can do this tax-free under the Home Buyer’s Plan (HBP). This plan requires you to pay the funds back to your RRSP over 15 years. If you’d rather not face these repayments, consider transferring funds from your RRSP to your FHSA since withdrawals from an FHSA don’t require repayment. You won’t get a tax deduction for the contribution to the FHSA (you already received the deduction when you made the RRSP contribution).Finally, you can use both the HBP and an FHSA to help buy a home, but make sure you maximize use of your FHSA no matter what. You can always transfer funds from your FHSA to your RRSP later if you don’t buy a home, and this transfer can be in excess of your available RRSP contribution room.3. Contribute to an FHSA in-kindMy kids have non-registered investments and will be transferring some of those to their FHSAs to make their contributions. They’ll trigger some capital gains, but the FHSA deduction will more than offset these. If you have investments that have declined in value, don’t transfer these to your FHSA in-kind since the losses will be denied. Rather, sell the investments, then contribute the cash. Your capital losses on the sale can then be claimed.4. Adjust your FHSA asset allocation as time goes byYou can have an FHSA for 15 years, which is definitely long-term. If you expect that it will be 10 or more years before you make a purchase, you’ll probably want to focus a significant portion of your FHSA assets in growth-oriented investments. This could be stocks, equity mutual funds, or other growth assets.As you get closer to the day when you expect to buy a home, you’
Ven. Gen 31st, 2025
