Tens of thousands of Canadians taking advantage of the new First Home Savings Account: RBC
The Royal Bank of Canada says it has seen a “phenomenal early uptake” within the First Home Savings Account (FHSA), a brand new program the place potential homebuyers can begin saving and investing for a down cost tax-free.
In a news launch Thursday, RBC stated Canadians have opened “tens of thousands” of accounts for the reason that guidelines for this system got here into impact on April 1.
“We’re seeing amazing interest in this new tax-free account, particularly among younger Canadians who are building a down payment for their first home,” Flora Do, vice-president of investments transformation and shopper segments, stated in a press release.
“Since our April launch, tens of thousands of RBC FHSAs have been opened by Canadians — phenomenal early uptake of this innovative way to save and invest for a first home.”
RBC didn’t say precisely what number of accounts had opened thus far this yr, however says that 26 per cent of its FHSA holders have already contributed all or many of the $8,000 most annual quantity, with an analogous proportion additionally making common pre-authorized contributions.
RBC shoppers between the ages of 25 and 34 make up the biggest proportion of the financial institution’s FHSA holders at 56 per cent, the financial institution stated. This is adopted by shoppers aged 35 to 44 at 20 per cent, these between the ages of 18 and 24 at 18 per cent and shoppers 45 and older at six per cent.
The commonest investments made utilizing FHSAs are trade traded funds (ETFs) and shares, RBC stated.
With a FHSA, account holders can begin saving for as much as 15 years, with a cap on annual deposits of $8,000 beginning the yr the account opens and a lifetime contribution restrict of $40,000.
Similar to a Registered Retirement Savings Plan, or RRSP, deposits could be claimed as a deduction towards taxable earnings.
Investments can develop within the account and be withdrawn tax-free, just like a Tax-Free Savings Account, or TFSA, if used for a down cost.
Unused parts of the annual contribution restrict could be carried ahead into the next yr, as much as $8,000, whereas any unused financial savings could be transferred tax-free into an RRSP or Registered Retirement Income Fund.
With information from The Canadian Press
