Mortgage Basics #Home Buying

What is CELIAPP TFSAPP Tax Boost for First-Time Home Buyers in Canada


The 2022 federal budget made way for a new tax-free savings account (TFSA) designed specifically for first-time home buyers in Canada. The account ultimately combines the advantages of the existing TFSA and registered retirement savings plan (RRSP) – popular down payment savings methods currently used. As of January 2023, first-time buyers can use a CELIAPP – the savings account for the Tax-Free First Home Savings Account (TFFHSA). 

Key Takeaways

  • The new TFFHSA will allow prospective home buyers to contribute up to $40,000 – with an annual limit of $8,000 – to put towards buying a first home beginning in 2023
  • If buying as part of a household, each individual putting money towards the purchase of a home can save in their own TFFHSA
  • The TFFHSA provides a tax deduction on contributions, like an RRSP, but offers tax-free withdrawals when purchasing a first home, like a TFSA

How CELIAPP works

This new account will allow prospective home buyers to contribute up to $40,000 to put towards buying their first home. Withdrawals and returns will be tax-free as long as the funds are used to purchase a home.

The TFFHSA provides a tax deduction on contributions, like an RRSP, but offers tax-free withdrawals when purchasing a first home, like a TFSA. It provides a very strategic financial planning opportunity for first-time home buyers who plan ahead.

The account also has time limits – annual contribution limits and lifetime contribution limits (read below) – so it’s important to understand the program in order to take full advantage of this new account.

IMPORTANT: Always seek advice from a tax professional before deciding what type of savings account will work best for you

Pros & Cons of TFSAAPP 

The benefit of a TFSAPP is that Canadians can plan ahead in order to ensure they have enough money to buy their first home, enabling them to set aside up to $40,000 to put towards a first home – $5,000 more than the RRSP Home Buyers’ Plan (HBP) limit.

A con may be that the TFFHSA is only intended to be used once. Unlike the HBP, you can’t use the TFFHSA, sell your home, wait four years and then repeat. A first-time home buyer for the HBP purposes is simply if, in the past four years, you didn’t occupy a home that you owned, or one that your current spouse or common-law partner owned.

Another con is that the TFFHSA can only remain open for 15 years. This means you have to plan when to buy a home. For instance, if you open an account when you’re 20 years old, the savings must be used for a first home by the time you’re 35. It may, therefore, make sense to start a regular TFSA and then open a TFFHSA at age 25 so that you can use it to buy a first home by 40. Always be sure to talk to your tax professional for the best advice for your specific needs.

TIP: Using a TFFHSA to your benefit requires planning as it can only remain open for 15 years

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Pros & Cons of HBP for RRSP

The HBP allows Canadians to withdraw funds from RRSPs to buy or build a qualifying home for yourself or for a related person with a disability. 

One con is that the withdrawn RRSP funds must be repaid within a 15-year period.

You can withdraw funds from more than one RRSP as long as you’re the owner of each RRSP account. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, don’t allow you to withdraw funds from them so it’s important to know which RRSP account type you hold.

A pro for the HBP is that you can use it more than once since you’re considered a first-time home buyer under this program if, in the past four years, you didn’t occupy a home that you owned, or one that your current spouse or common-law partner owned. See: What is the RRSP Home Buyers’ Plan (HBP)?

TIP: The $8,000 annual TFFHSA contribution limit doesn’t carry forward like RRSP contribution limits

Frequently Asked Questions

What is the max contribution per year for CELIAPP?

The maximum contribution is $8,000 per year to a maximum of $40,000 per person towards the purchase of a first home. If buying as part of a household, each individual putting money towards the purchase of a home can save in their own TFFHSA.

Can I use tax-free payments on my mortgage with CELIAPP?

No. This program is designed to help Canadians save for a home, not for existing homeowners to use towards their mortgage payments.

Is CELIAPP a good choice for every home buyer?

No. There are restrictions on the new TFFHSA, including that you can only use it once to buy a home. 


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