Sarah and Michael, both 35, have a combined gross annual income of $180,000. They are expecting their first child and are planning to buy their first home in 3 years. They currently rent and have $75,000 in a savings account. What is the most tax-efficient and integrated strategy for their house down payment and future family needs?

Question: Sarah and Michael, both 35, have a combined gross annual income of $180,000. They are expecting their first child and are planning to buy their first home in 3 years. They currently rent and have $75,000 in a savings account. What is the most tax-efficient and integrated strategy for their house down payment and future family needs?

Answer options:

• Invest the $75,000 in a diversified non-registered portfolio, as they might need flexibility for upcoming child-related expenses. ✅ Each contribute annually to a FHSA up to the maximum, then direct any remaining savings to TFSAs.
• Fund their RRSPs aggressively to generate a larger tax refund, which can then be used for the down payment.
• Purchase a whole life insurance policy to accumulate cash value, which can be borrowed against for the down payment.

Correct answer: Each contribute annually to a FHSA up to the maximum, then direct any remaining savings to TFSAs.

Explanation: The FHSA allows tax-deductible contributions and tax-free withdrawals for a first home, making it highly efficient. Any surplus savings can then go into TFSAs for tax-free growth and withdrawals, providing flexibility for other family needs without being locked into retirement-specific accounts.