In CRA’s words, you are considered a first-time home buyer if:
… you did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that either:
You owned or jointly owned
Your spouse or common-law partner (at the time the account is opened) owned or jointly owned
Here are the CRA qualifications to use the funds for a home purchase:
You will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that you owned or jointly owned.
Read closely
Did you spot the difference between the two definitions, opening and withdrawing? When withdrawing from the account to purchase a home, there is no mention of a spouse in the definition. It matters if your spouse owns a home when opening an account but not when you are purchasing a new home.
Have a personal finance question? Submit it here.
The other differing clause in the definition is “except the 30 days immediately before the withdrawal.”This is important. You must withdraw money from your FHSA within 30 days of closing; otherwise, it will no longer be a qualified withdrawal and will be taxed if withdrawn. I know, you’re thinking you will use the money for the down payment, so it won’t be an issue. Perhaps, but what if you have other money for the down payment and you intend to use the FHSA for furnishings or renovations? The 30 days may quickly slip by before you get around to withdrawing the funds.
Again, you are good to continue contributing to your FHSA and then use the funds to purchase your first home even though you are living with your wife in the home she owns.
Other FHSA rules worth noting
You made a really good decision to use the FHSA to save for a home. It is one of the best, if not the best, accounts available to anyone who qualifies and plans to purchase a home sometime in the next 15 years. When used as intended, you get a tax deduction on the money you contribute, just like a registered retirement savings plan (RRSP) contribution. Then, when you draw money to purchase a home, your money comes out tax-free, just like a tax-free savings account (TFSA). It’s the best of both worlds—you never pay tax on that money, coming or going!
Article Continues Below Advertisement
You can add $8,000 per year to a FHSA to a maximum contribution limit of $40,000. The tax deduction doesn’t have to be claimed in the year you make the contribution and can be saved for future years when you have a higher income. When you claim and receive the tax refund, do your best to save it. It can be added to an RRSP, allowing you to use the RRSP Home Buyers Plan, or to a TFSA.
Compare the best FHSA rates in Canada
It is important to note that you can catch up past FHSA contribution room, but only back to the year you opened the account. This is different from a TFSA, where you can go back as far as when you were age 18 or the TFSA inception date (2009), whichever is sooner.
When catching up, the most you can add to a FHSA in any given year is $16,000, meaning you can only catch up one year at a time. For anyone about to purchase a home without an FHSA and extra cash, consider borrowing $8,000 to open a FHSA. You can claim the $8,000 as a tax deduction and use the tax savings to purchase an appliance or two. For someone in a 30% tax bracket, you would benefit from about $2,400 in tax savings. Once your home closes, withdraw the $8,000 and pay off the loan and you will have paid very little interest.
The FHSA escape clause
If it turns out you never purchase a home or can’t make a qualifying withdrawal, you can transfer your FHSA funds to an RRSP. You won’t get a tax deduction because you got that when you contributed to the FHSA. What you do get, though, is an extra $40,000 of RRSP contribution room.
This was a good question, Shelly. The FHSA is a good, seemingly straightforward account—but you do have to be to be onside with the definitions.
Get free MoneySense financial tips, news & advice in your inbox.
With over 30 years as a financial planner, Allan is an associate portfolio manager at Aligned Capital Partners Inc., where he helps Canadians maintain their lifestyles, without fear of running out of money.
A report by TD economist Rishi Sondhi said sales activity hasn’t been absorbing supply fast enough, with July condo resales in the GTA down 25% from pre-pandemic levels.
Sondhi said the trend is tied to factors such as a wave of newly built condos hitting the market, elevated borrowing rates that have made it difficult for some buyers to close on their mortgages, and investors looking to sell properties as declining rents and negative cash flow make them unprofitable.
“The relatively elevated interest rate backdrop means that the gap between the rate of return from a condo in the GTA … and from a risk-free’ government bond has narrowed,” he said in the Sept. 5 report.
“This may have reduced the incentive to hold a condo as an investment, although the recent drop in yields could be helping to re-widen this spread.”
You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*You will be leaving MoneySense. Just close the tab to return.
Condo completions in the GTA
Sondhi’s report showed there were around 19,000 condo completions in the region between January and July of this year, up from about 12,000 during the same seven-month period in 2023 and 10,000 the year before.
The pace suggests this year could see “record high” condo completions in the GTA, said Brendon Cowans, a sales representative for Toronto-based brokerages Property.ca.
“You can just imagine all of this supply coming in a high interest rate environment. It’s not a lovely combination,” he said.
Active condo listings across the GTA were up 63.9% in July from the same month last year, growing from 5,416 to 8,879, according to data from real estate firm Zoocasa. The City of Toronto has seen a similar jump, with active condo listings increasing year-over-year by 61.5% in the same period.
What’s happening in other major cities?
Although the GTA leads the country in active listings gains, the trend is in line with other major cities across Canada. Year-over-year active condo listings rose more than 40% in London, Hamilton-Burlington, Mississauga and Ottawa in Ontario, as well as Vancouver. Montreal and Calgary each saw growth of about 23%.
This is good news for aspiring condo buyers, who now have larger inventories to choose from. But it’s trouble for those trying to sell their condo, who may have to either significantly reduce their asking price or, in a worst-case scenario, delist their property until the sellers’ market becomes more favourable.
Growing numbers of condo owners are choosing the latter option. But what sort of consequences may they face for that decision?
You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*You will be leaving MoneySense. Just close the tab to return.
Will you have to reimburse your realtor for their expenses?
Rick Kedzior, president of the Ontario Real Estate Association, says that province’s Trust in Real Estate Services Act is of great help to sellers in this scenario, thanks to the mandatory requirements it places upon agents. B.C., Alberta and Manitoba have all introduced or updated similar laws to Ontario’s in recent years.
“When an agent takes on a listing, they supply the seller with a schedule of the services that are going to be provided, and that schedule also specifies who will be paying for what,” Kedzior says. “From an agent’s perspective, staging and any other ancillary services they’re providing is the cost of doing business. Another example is any costs associated with an MLS listing. I’ve never seen a situation where the seller gets stuck with having to pay for that.”
The only (and rare) situation when the seller could get stuck with a bill would be spelled out in the listing agreement. “When you have the meeting to list your home, they may say, we’re going to provide staging or paint the house for you, or some things like that,” says Ahren Spylo, a spylorealty.com broker with Keller Williams Realty in Waterloo, Ont. “And if you decide to take the condo off the market, then they may like to settle whatever that cost is. But that would have to be predetermined.” Make sure you understand the Agreement of Purchase and Sale when you sign it.
Are there less tangible costs to delisting a condo?
There can be a stigma associated with a property that gets pulled off the market without selling. “So you put it on the market for, say, 90 days—that’s kind of the norm—and then you take it off the market. There would be, from an agent’s perspective, a question of ‘What happened to that listing?’ ” Kedzior says. But it’s hard to quantify.
There can, of course, be a very real opportunity cost if you end up changing your life plans as a result of the non-sale. It could interfere with plans to accept a new job in a different community, or force you to pay for upgrades needed to make the property suitable for renting out or accommodating a growing family.
I’ve lived in the city for the last four decades, but I’ve mostly been renting. My priorities are a three-bedroom apartment with easy access to grocery stores and the subway in a nice, quiet neighborhood.
But housing prices are insane in New York City. I want a house, but my partner is looking at a co-op. And for my price range of $700,000, the best options I can find are co-ops.
I plan to buy the home and live in it, and am not looking to rent it out in the foreseeable future. The home is for my family of four.
So my question is this: Is a co-op a good idea?
New York Native
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Dear New Yorker,
For those unfamiliar with what a co-op is, it’s short for housing cooperative. A cooperative is a legal group that owns one or more residential buildings, and the residents are members of it. The cooperative can comprise apartments, but it can also be made up of single-family homes. Residents who purchase a co-op unit don’t own the unit itself and have a share in the common areas. Instead, they’re purchasing a share of the overall property, and that share gives them the right to live in a specific unit.
When you look for homes, you may find that co-operative apartments are cheaper than comparable condominium units in the same city, or than single-family homes. And with the median home price in Manhattan being $1.2 million, according to Douglas Elliman, a co-op apartment for $700,000, if you find one, may sound like a good deal.
But, as you already know, for a three-bedroom, you’ll be quickly priced out of Manhattan. The real-estate brokerage said that a three-bedroom co-op apartment on the island would run about $2.23 million. And only 12% of co-op sales were three-bedroom apartments, versus 38% for one-bedrooms.
You will find deals further out. In Queens, Douglas Elliman said, the median price of a condo unit was about $720,000 in the second quarter of this year, and a co-op apartment cost roughly $310,000.
But there are drawbacks that you should consider, if you haven’t already.
First of all, you don’t technically own your co-op apartment as you would own an apartment in a condominium. Co-ops also charge you fees, which can run $4,000 a month, as Streeteasy observes, depending on the size of the unit, and so on. Applying for co-op ownership can be a painful process. Renting them out (if you can do that at all) will be hard, since the renter will have to go through the co-op board.
Selling is similarly tough, as the prospective buyer needs to be approved by the board. A board can require that a buyer put a lot of money up front, as Curbed explains. Ultimately, you may end up with less equity over time as experts say co-ops don’t typically appreciate at the same pace as condominium units or single-family houses or town houses.
Co-ops are also very “secretive,” as the Guardian put it, with little transparency into how boards make their decisions about potential buyers and renters. According to data from the New York City Department of Housing Preservation and Development, there were 3.6 million housing units as of 2021, out of which 832,000 were in a condominium or a co-op.
That being said, co-ops aren’t all that bad.
The important thing to remember is if you’re just looking for an affordable place to live with your family, the numbers may very well make sense.
Co-op apartments are priced lower than units in condominiums, as already mentioned, so you’re still able to find good options with easy access to the subway and other urban amenities. You can stop dealing with rent hikes from your landlord and have a property to call your own. And, ultimately, you also live in a building with many long-term tenants versus living among neighbors who change every year. There can also be a greater sense of community in a co-op vs. a condominium as co-op residents may tend to change less frequently.
So you have to weigh the pros and cons. If you’re looking for a more affordable entry into New York City real estate, and have the stomach to navigate the co-op process, then, by all means, apply for that apartment your wife liked.
Bottom line: Just be sure you won’t want to move in a couple of years from now because you likely won’t be able to rent it out for long, if at all.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
As everyone knows, disputes between neighbors can be brutal. But when tens of millions of dollars in development are at stake, the fight becomes next-level.
That’s what is happening in Huntington right now, as neighboring property owners scrap over their plans to build rival condominium projects.
Earlier this month, the town board approved a plan pitched by Oheka Castle owner Gary Melius to build a 95-unit condo building on a portion of the castle’s 22-acre property.
The approval came over the vehement objections of attorneys for Oheka’s neighbor the Cold Spring Country Club, which is in contract with a developer to sell 13 acres of its 168-acre property for a separate 175-unit condo project, to be built just a chip shot away from the Oheka condo building.
As with any neighbor dust up, this one has a lot of history. Melius had previously offered to buy the club’s 13 acres and add it to about 5 acres of Oheka property so developers could build 190 condos on the combined site.
In fact, the Town of Huntington had approved the 190-unit plan in 2012, but the project, which was first to be developed by Gale International and then later by another development firm, FBE Limited, never materialized.
On the latter plan, Melius claims Manhattan-based FBE, which is now in contract to buy the club’s 13-acre development site, eventually cut him out of the project.
“I spent 10 months with FBE to buy my deal,” Melius told LIBN. “I gave them nine changes to the contract, and I said that’s enough of that. Then they went over to the club and bought their land because they knew I couldn’t do it without their land.”
In response, Melius took FBE and the club to court in 2021 for breach of contract, and though some of the claims in the lawsuit were dismissed, the case remains pending. Meanwhile, Melius sought and received town approval for his own plan to develop a four-story, 95-unit condo building on a portion of Oheka’s property, however, the approval was conditional on the condo development being able to use East Gate Drive and a connecting spur that’s owned by the club, which club officials say they won’t allow.
The road spur that connects with East Gate Drive was actually purchased by the club in 2009, in preparation for the previously contemplated sale of its 13-acre development site to Melius. And attorneys for the club plan to soon file an Article-78 lawsuit challenging the town’s approval of the Oheka project.
ROAD RAGE: The country club’s road spur that connects East Gate Drive with the castle is a major sticking point in the condo dispute. Photo by Judy Walker
“One of the major issues is obviously access to this proposed development over the club’s property, to which Oheka has no legal right,” said attorney Howard Avrutine of Merrick-based law firm Avrutine & Associates, who represents the club. “That is something we believe the town should have made sure was addressed upfront before it rendered any decision.”
Both Melius and his attorney Michael McCarthy argue that the club doesn’t need to grant access to East Gate Drive and the connecting spur because it has been historically used by people coming to Oheka.
“East Gate Drive has been open and used by the general public from the time that Otto Kahn first built the castle, that’s the story on Oheka’s side,” McCarthy said.
But Avrutine counters that Oheka’s use of the road is limited.
“Under a theory of prescriptive easement, you have the rights that you acquired based upon the historic usage. You don’t have rights to do anything you want,” Avrutine said. “Since historically, there’s never been a 95-unit condominium development there, how could it be possible to argue that Oheka has the right of access to it based on historical usage? You can’t. That’s really the centerpiece of the reason why they simply cannot use it.”
In addition, attorney Anthony Guardino of Uniondale-based Farrell Fritz, who represents developer FBE, said in granting Oheka approval for the condo project, the town ignored the expressed restriction in the Historic Overlay District zoning it used to justify the project’s requested density.
“It’s an overlay district and the regulations specifically say you must apply the height, area and bulk requirements of the underlying zone,” Guardino says. “On the 5 acres, it allows one unit per acre and on the remainder, that has a density of two units per acre. The math never adds up to 95.”
On the club property, FBE has proposed to develop a two-building condo complex on about 13 acres of mostly wooded area just west of East Gate Drive and north of Colonial Drive, across from the Cold Spring clubhouse. The 175-unit condo project, which would be developed under the town’s Residential Open Space Cluster zoning, will have an on-site wastewater pump station that would be connected to the nearby Nassau County sewer system. The Oheka project will be building its own sewage treatment plant to serve its condos.
View from Cold Spring’s 17th hole with part of the wooded 13-acre proposed development site behind it. Photo by Judy Walker
When it comes down to it, both Melius and the club have similar goals, which is to generate revenue to ensure the future success of the castle and the country club. Doug Solow, Cold Spring’s president, says the money from the sale of its development site will allow for much-needed capital improvements for the 260-member club that was incorporated in 1949.
“We’re in this for the long-term preservation of our club, for our membership, for the community, and we have absolutely no ill will at all towards Gary or the castle,” Solow said. “Because it’s in our best interest as well as the community’s to have the castle succeed because our golf course is constructed around it.”
Huntington Supervisor Ed Smyth called the town’s approval of the Oheka project “a lifeline” to the historic property. There will be an upfront $2 million payment put into a fund that will go towards maintenance of the castle in addition to 15 percent of each condo owner’s annual dues.
For Melius, the condo project could help Oheka climb out of its deep financial hole. The property is once again facing foreclosure, after a summary judgment ruling for Oheka’s lender last month by Judge Elizabeth H. Emerson in Suffolk County Supreme Court.
More than a decade ago, Melius defaulted on a $28 million commercial mortgage-backed securities loan, the debt of which has since ballooned to about $40 million with interest and advances, according to attorney David Rosenberg of Garden City-based Rosenberg Fortuna & Laitman, who is the court-appointed referee in the case. In the coming weeks, Rosenberg will schedule a hearing to determine the amount actually due to the lender U.S. Bank National Association, which will pave the way for the court to issue a judgment of foreclosure and direct a sale of the Oheka property.
However, the original lender may not be the entity that ultimately takes over the property. After a sale of the Oheka note found no takers last October, the loan is once again up for sale next week, and this time, it becomes a little more attractive because of the property’s valuable condo project approval. Melius says he will bid on the note in an attempt to buy it at a discount, but if that doesn’t work, he still doesn’t plan on surrendering Oheka to foreclosure anytime soon.
“I held them up for seven years. Now they got a victory in court, but I’ve made a motion to re-argue so that’s going to take a while,” Melius said. “Then, my next move is, I will go through Chapter 11, and they’ll take three or four more years to get it, if they ever got it.”
Originally built for financier Otto Kahn in 1921, the 126-room Oheka is listed on the National Register of Historic Places. The Cold Spring golf course and the property surrounding it that was used to develop about 300 single-family homes and the Otto Keil nursery behind the country club were all part of the original Kahn estate.
Photo by Judy Walker
Once used as a retirement home for the town’s municipal employees and later as the home of the Eastern Military Academy, the castle was abandoned and crumbling when Melius took ownership in 1984. Over the years, Melius claims he has spent $46 million on renovations and improvements to the Oheka property.
In addition to ongoing financial woes, Melius survived an attempt on his life in Feb. 2014, when he was shot in the face by a still-unknown assailant. Now 78, the ever-feisty castle owner says he feels terrific, despite this latest development tug-of-war.
“I got over getting shot in the f—ing head,” he said. “You think these guys are going to bother me?”
Melius touted the support of the community and the town board in gaining approval for his project and predicted the neighboring proposed development would face an uphill battle.
“You think they have a chance when the whole community is against them? Never,” Melius said, “especially with the political power I have.”
Meanwhile, observers wondered if a comment by Supervisor Smyth following the vote to approve the Oheka plan might signal prejudice against the club’s pending proposal.
“I would congratulate Cold Spring Country Club for now having the most valuable piece of unbuildable land on Long Island and the lawyers will understand that,” Smyth said.
Oheka attorney McCarthy said that the best situation would be for the two parties to get together and build the original project.
“But there’s a lot of sniping going on and a lot of lawyering going on and it doesn’t help the community and it doesn’t help anybody except these warring factions,” he said. “The country club has a very nice piece of property, they’ve got very good lawyers, I’m sure that they can create a very successful development project.”
While the club’s condo proposal preserves the golf course, club officials say its existing zoning could also allow the development of nearly 300 single-family homes if the entire golf course was sold. But Solow said that’s not being contemplated at this time.
Instead, Solow says the club would like to see everybody succeed.
“If everybody is successful, everybody is happy,” he said.
