Cpa Kaival PatelDirector, Profuture Tax Academy · Helping Small Business, CPA & Bookkeepers to Grow

The deadline to contribute to your First Home Savings Account (FHSA) for 2024 is Dec 31, 2024?

Name: The deadline to contribute to your First Home Savings Account (FHSA) for 2024 is Dec 31, 2024?
Uploaded: 2024-12-23T17:48:17+00:00
Duration: 1 min 39 s
Channel: Cpa Kaival Patel
Description: In this explainer video, the presenter introduces Canada's First Home Savings Account (FHSA) as a tax‑free way to save for a first home. They detail the…

23 Dec 2024 · 2 min

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1:39

In this explainer video, the presenter introduces Canada's First Home Savings Account (FHSA) as a tax‑free way to save for a first home. They detail the contribution limits ($8,000 per year, $40,000 lifetime), explain that both contributions and withdrawals are tax‑free, and illustrate the tax advantage with a concrete Ontario example: a $100,000 salary incurs $21,658 in taxes, but contributing $8,000 to an FHSA reduces taxable income to $92,000, lowering tax to $19,140 and saving roughly $2,500. The speaker then projects a five‑year contribution of $40,000, assumes investment growth to $50,000, and highlights that the $10,000 gain would be withdrawn tax‑free when purchasing a home. The video emphasizes the double benefit of lowering current taxable income and enjoying tax‑free growth and withdrawal.

Chapters

Did you know there's a way to save for your first home tax-free? Most Canadians miss out on this incredible opportunity. The First Home Savings Account lets you put up to $8,000 every year and maximum $40,000 per person. And here's the kicker: The contributions are tax-free and the withdrawals also completely tax-free. That means you get double benefit of lowering your taxable income as well as whatever growth is tax-free. Let's understand by example. Let's say you are earning $100,000 as a taxable salary in Ontario, then you are going to pay $21,658 as taxes. But if you contribute $8,000 as FHSA, your taxable income becomes $92,000 because of the contribution. Now the updated tax will be $19,140. This means you are saving $2,518— $2,500. Also, the $8,000 went to your FHSA account. Let's say you contribute for next 5 years totaling $40,000, and this you will be investing into the markets, GIC, you will be earning something. Let's say it becomes $50,000 when you are supposed to withdraw it. This $10,000 is also tax-free when you buy home.