Canwest News Service Published: Wednesday, February 03, 2010
Having both a TFSA and an RRSP may make good sense for people planning to buy their first home, says Bill Lott, a financial advisor with Edward Jones Investments in Osoyoos, B.C.
First-time homebuyers can withdraw up to $25,000 from an RRSP without facing taxes as long as the money is repaid to the RRSP within 15 years.
But $25,000 may not be enough for a down payment in many cities across Canada. Homebuyers with a TFSA can add to their down payment with any or all of their TFSA savings without tax penalties.
"I really like TFSAs because there are so many ways you can use them," Mr. Lott says.
As well, TFSAs make more sense for anyone with a chronic medical condition that is certain to limit their lifespans.
Better to put money into a TFSA, which can be withdrawn with no penalty, to support you when your condition makes it difficult or impossible to work, says Jamie Golombek, director of tax and estate planning at the Canadian Imperial Bank of Commerce in Toronto.