Spring arrived and home-buyers will be able to access a new government mechanism to deduct taxes on their savings.
The CELIAPP is a scheme that allows first-time home-buyers to contribute up to $8,000 per year tax-free. Its main objective is to make it easier for prospective first-time home-buyers to save for a first down payment.
With this new figure that begins to operate as of April 1, 2023, the money you contribute can be deducted from your taxable income for the current year or future years, and the investment income obtained will not be subject to tax, nor will the withdrawals you make to buy your first home.
Although there were already similar financial figures such as the RRSP, the TFSA and the HBP, which allowed reducing taxes or protecting your investments from taxes, the novelty of the CELIAPP is that no reimbursement will be required and the amount that can be withdrawn in the short and medium term will not be limited, which generates a tax benefit in the short term.
These are the main characteristics of CELIAPP:
Contributions are tax-deductible.
Holders can transfer unrealized contributions up to $8,000 to their TFSA account. The lifetime TFSA contribution and rollover limit is $40,000.
The contribution margin only begins to accrue after the individual has opened a TFSA account for the first time.
The TFSA has a maximum duration of 15 years and must be opened between the ages of 18 and 71.
There is no minimum maintenance period for TFSA contributions to be deductible and withdrawable (unlike HBP).
Contributions made in the first 60 days of a given calendar year cannot be carried forward to the previous tax year (unlike RRSPs).
Once the account is opened, unused contributions can be carried over from the annual contribution limit. For example, if you contributed $4000 in 2023, you may be able to contribute $12,000 ($4000 from 2023 + $8000 from 2024) in 2024.
REQUIREMENTS:
You are eligible if you or your spouse did not own or occupy a home that was your principal residence in the calendar year prior to opening the account, nor in the 4 calendar years prior to opening the account.
Be over 18 years of age or under 71 years of age
Residing in Canada
HOW TO OPEN A CELIAPP ACCOUNT?
If buying a house is among your short and medium term projects, CELIAPP is undoubtedly a savings tool that you should not miss. However, as with all investment and savings mechanisms, it is important to receive advice from experienced advisors who can understand your objectives and analyze your current situation.
Contact Growthlife's group of advisors to request personalized advice and clarify doubts about the CELIAPP.
+1 (514) 746-2915
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