Plan your first home today with CELIAPP.
Buying a house has never been this difficult. Between the constant rise in prices and the cost of living, many young people (and not-so-young!) wonder how they’ll manage. Yet, a new tool has emerged to give a real helping hand: CELIAPP.
What is CELIAPP?
The Tax-Free Savings Account for the Purchase of a First Property is a federal program designed to help Canadians save for buying their first home.
It combines the advantages of RRSPs and TFSA:
Contributions are tax-deductible, as with RRSPs;
Withdrawals eligible are tax-free, as with a TFSA.
In other words, you save tax-free, and you withdraw your funds tax-free when you buy your first home.
The main advantages
1. Immediate tax deduction
Each dollar contributed reduces your taxable income, which can translate into a tax refund in the short term.
2. Tax-free growth
Your investments inside the CELIAPP (funds, guaranteed investments, etc.) grow tax-free as long as they remain there.
3. Tax-free withdrawals for buying a home
If you use the funds to buy your first eligible property, you pay no tax on withdrawal.
4. Can be combined with the HBP (Home Buyers’ Plan)
You can combine the CELIAPP with the HBP, which further increases your potential down payment.
Why start early?
Home prices have risen significantly, and the down payment required follows the same trend.
Starting early allows:
To benefit from compounding returns over several years;
To accumulate the maximum contribution (up to $8,000 per year, for a total maximum of $40,000);
To be ready when the opportunity to buy presents itself, without relying on a personal loan or a family gift.
Even if you don’t plan to buy right away, opening your CELIAPP now gives you a head start.
Concrete example
Let’s take Marie, 27, who contributes $500 per month to her CELIAPP.
In one year, she invests $6,000 and receives a tax refund (based on her tax rate).
In five years, with an average return of 4%, she could have about $33,000 — entirely tax-free for her future home.
Why open it now?
Even if you don’t yet have the means to contribute regularly or to max out your CELIAPP, it’s still worth opening it as soon as possible.
A simple deposit, for example $100, is enough to activate your account and start accumulating your contribution room.
Thus, you don’t lose years of accumulation and you leave yourself the possibility, later, to contribute larger amounts when your financial situation allows.
This is a simple way to prepare for the future without pressure, while keeping all doors open for your purchase project.
In a nutshell
The CELIAPP is one of the best savings tools available today for future homeowners.
The earlier you start, the more you benefit from its tax advantages and the return on your savings.
Even if your home project seems far away, it’s never too early to plan it.
Expert advice
A financial advisor can help you determine how much to contribute, in what order to prioritize your accounts (TFSA, RRSP, CELIAPP), and how to maximize tax advantages based on your situation. Contact us today so that we can analyze your situation together.