As one of the most expensive places in Canada to buy a home, many first-time home buyers in the Victoria region struggle to come up with a sufficient down payment to purchase a home. In some cases, parents provide a tax-free gift to their adult children to help with the down payment, but that isn’t always possible or preferable.
The 2022 federal budget, announced in April, provides some benefits to assist first-time home buyers. A Tax-Free First Home Savings Account will allow individuals to save up to $8,000 per year to a maximum of $40,000. This help for first-time Home Buyers enables the contributions to be tax deductible, like with a Registered Retirement Savings Plan (RRSP), and when the funds are withdrawn towards the purchase of that first home, they won’t be taxed, like a Tax-Free Savings Account (TFSA).
“I am often asked about tax savings when purchasing a home,” says Sharlane Bailey, owner of Canwest Accounting. “This looks like a good tax-free solution for first-time home buyers, even if $40,000 isn’t a large enough down payment to purchase most places in Victoria.”
The government is also doubling the First-Time Home Buyers’ Tax Credit amount to $10,000. This will provide as much as $1,500 in direct support to home buyers and will apply to homes purchased on or after January 1, 2022.
These programs, combined with more housing supply, will hopefully help more individuals with purchasing their first home.
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The suggestions and advice provided by Canwest Accounting should not be relied upon in place of professional advice. You are responsible for checking the accuracy of relevant facts and opinions provided.