Tax-free savings account

There are only three sure things in life. First, there is death. Second, there are taxes. Finally, there is the fact that Dolly Parton sleeps on her back. Even though taxes are a sure thing, you should be aware of any new measures the government introduces to help you save some money. Recently, the government has introduced a savings plan that will at least reduce some of your potential taxes. It's called a TFSA or tax free savings account.

How does it work?

Each year, you are given an allowance of $5,000 to contribute to a TFSA. This amount is cumulative on an annual basis, so if in one particular year you cannot contribute to the maximum, you can carryforward the balance on your account. TFSA can be self-directed or they can be managed by a financial institution. For most people, they would likely manage their TFSA's similarly to their RRSP's, so that would be by a financial institution. The benefit of a TFSA is that any money that you earn with this investment is not taxed. This can lead to substantial savings for the investor over time. This is an excellent way to save money.

Which is better? RRSP's or TFSA's?

Well, both programs are designed to save you money, so you should take into account which form of tax savings work best for you. Each person has different needs with respect to cash flow needs and financial goals. It is probably best if you talk to an accountant. Sadly, that is the best advice that I can give, but there are many considerations that need to be made as to whether you should throw excess cash towards an RRSP or a TFSA.

Realtor.ca

It looks like there is a new website to check out properties. Formerly, mls.ca the site has now changed to realtor.ca. It appears as if they property search function has combined with google maps to provide precise details of property locations. I have mixed feelings about this. First, I probably just don't like adjusting to something that is new. That being said, I do like the feature where properties are imuputed on a map, so that detailed locations can be seen. This is an added feature for those people that may not be familiar with all of the streets in the area.

Now, I encourage you to keep an eye on properties in your area if you are interested in purchasing a house in the next couple of years. It's good to know the market a little bit, so that you know what you can expect to pay when it comes time. It gives you an idea of what it costs, and it also gives you an opportunity to plan your down payment a little bit better. You may consider investing in RRSP's, tax savings account (new in 2009), or other investment choices while trying to build up a down payment. It's important to plan because there are certain rules and regulations that you need to follow in order to be able to take advantage of tax savings.

I'll probably talk about tax implications a bit more in a future post, but I want people to check out realtor.ca today, so that they can plan on where they would like to live and begin the planning process as soon as they can.