TFSA | Some tips for “CELIAPPer”

The purchase of a first property is often described as the investment of a lifetime, but it is not easy to manage the financing of this project when one is faced with the volatility of the stock markets, the inflation which unbalances the budget and the risk of recession. All the more reason to use all the tools at your disposal, including the new CELIAPP, a derivative of the TFSA. Advice.

Many young people aspire to own their first home. Often, they give themselves a few years to build the project. They wonder how to accumulate the capital necessary for the down payment. Is the TFSA a valid vehicle, and how should the accumulated funds be invested?

Invest the funds

First, the question of investment strategy. She is straightforward. “The period is too short to invest this money on the stock market,” says Charles Hunter-Villeneuve, tax expert and financial planner, Private Management 1859, National Bank. Investing in the stock market must be done on a long-term horizon. The amounts accumulated for this project must be invested in guaranteed investments, such as GICs offered by banks or government bonds. The fight against inflation has caused interest rates to rise substantially, so that returns of 4 to 6% are now possible on these investment vehicles.

The arrival of the CELIAPP

But above all, as this is the purchase of a first property, all interested parties should watch for the date of 1^er April, when the CELIAPP will be launched. “It will be an extraordinary tool for first-time home buyers,” explains Mélanie Noël, Wealth Manager at Desjardins. The advantages of the CELIAPP are numerous, so much so that the tool will certainly become a must, our two experts agree. It is possible that all the systems necessary for the operation of this new program will not yet be in place on 1^er april. But the institutions will offer facilities to savers so that they can start accumulating their contributions.

How the CELIAPP works

Contributions to the TFSAPP will be $8,000 per year, and like the RRSP, they will be tax deductible. But they can, unlike the RRSP, be withdrawn without being taxed, as well as all the investment income they have generated. In addition, the deduction of the contribution can be deferred to a later year. Finally, the use of the CELIAPP does not exclude also using the RAP program associated with the RRSP, ie the program which allows you to temporarily borrow the sums accumulated in the RRSP for the purchase of a house. These sums must be repaid to the RRSP over a period of 15 years. Contrary, the sums withdrawn from the TFSA for the purchase of the house do not have to be reimbursed.

Accessible to couples while getting help

For young people living as a couple under the same roof, both are eligible for the CELIAPP, but on the condition that neither of them owns the place where they live. Otherwise, both would not qualify. “But if they are tenants, both can ‘CELIAPPer'”, says Charles Hunter-Villeneuve. It is common for young people to get help from their parents who give them a donation to help them acquire their first property. “To maximize the possibilities offered by the CELIAPP, parents could simply donate the amount of the contributions to their child,” suggests Mélanie Noël. Prospective young owners would thus enjoy all the benefits of the program.