Invest in Private Real Estate with Your TFSA (2024)

Want to maximize the returns on your savings and investment portfolio? A Tax-Free Savings Account can help.

Have you ever considered investing using your Tax-Free Savings Account (TFSA)? For many Canadians, the popular registered account type is an accessible and tax-efficient choice for building wealth. It can hold many investments, ranging from cash savings to alternative investments in private real estate, and offers flexibility around withdrawals.

What exactly is a TFSA?

A TFSA is a tax-sheltered account that allows you to save and invest your money without paying taxes on the interest, dividends, or capital gains you earn. As the name suggests, growth within the account is tax-free.

What are the benefits of a TFSA?

Yes, TFSAs really are tax-free! The most significant benefit of a TFSA is that Canadians will not get taxed on earned investment income and capital gains. Although contributions to TFSAs are not tax-deductible like with a Registered Retirement Savings Plan (RRSP) and are made with after-tax dollars, withdrawals are tax-free.

Does my income affect my TFSA contribution limit?

No, your income does not affect your TFSA contribution limit. The annual TFSA dollar limit is indexed to inflation and has seen steady increases over the years. The 2023 amount is $6,500 and for 2024 the amount is $7,000.

Will my TFSA contribution limit expire if I don’t use it?

No, TFSA contribution limits do not expire. Any unused contribution allotments will carry over into the following year.

Your TFSA contribution dollar limit accumulates every year even if you have never opened an account. Canadian residents’ contribution limits began accumulating in 2009, the year the TFSA started. For younger investors, the dollar limit would have started accumulating from the year you turned 18. If you were 18 years or older in 2009, an investor opening a new TFSA in 2023 would have a total contribution limit of $88,000 and $95,000 in 2024.

How do I withdraw from my TFSA?

Withdrawing money from your TFSA is incredibly easy. Depending on your investment, you can typically withdraw any amount from your TFSA at any time and for any purpose. This makes the account type suitable for both near- and long-term investing goals. However, it will not reduce the total annual contribution you made that year. Contact your financial advisor for specific details on how you can withdraw your funds.

What type of investments can I hold in my TFSA?

You can hold many types of qualified investments in a TFSA. These include mutual funds, stocks, bonds, ETFs and investments in a real estate investment trust (REIT).

What are the benefits of holding a REIT in a TFSA?

There are many benefits to holding a REIT investment in a TFSA. Because you cannot own land in your TFSA, investing in a REIT is an excellent alternative. A REIT is a company which owns, runs and finances income-generating real estate projects such as multi-residential apartments, commercial properties and developments.

Investing in REITs through your TFSA can help you diversify your investment portfolio while generating passive income. A private REIT can be a savvy choice if you are looking for a tax-efficient way to increase your fixed income.

REITs can also make the otherwise complex world of real estate investment much more accessible. Compared to purchasing real estate and managing it yourself, investing in a REIT can significantly reduce your up-front investment costs and eliminates the hassles of property ownership while contributing to a diversified portfolio. You can invest and start growing your wealth sooner, plus the tax benefits of using a TFSA will ensure that your investments can grow without incurring any added taxes.

Now, the question is, how can YOU start investing in real estate using your TFSA?

Well, the answer is easy! Considering our current real estate market and the plans set out by the Canadian federal government to incentivize the new construction of purpose-built rentals, speaking with an expert at Equiton can put you on the right path. Contact us today to learn more about private real estate investing and how you can make your TFSA work for you.

What Private REITs does Equiton offer?

At Equiton we help investors grow their wealth by offering easy access to all types of investment grade real estate through our two private real estate investment funds and development offerings. By partnering with Equiton, you are partnering with real estate experts who make investing simple.

The Apartment Fund specializes in acquiring underperforming and undervalued multi-residential properties, select new developments in Canada and increasing value through active management. The Fund targets an annual net return of 8-12%. Investors benefit from monthly distributions from rental income and capital appreciation from property value increases.

The Income and Development Fund provides access to a diversified portfolio of institutional-grade real estate including income-producing (commercial/ industrial/ lending) as well as development projects. The Fund targets an annual net return of 12-16% (over 10 years). Investors benefit from monthly cash flow from rental and lending income, capital appreciation from properties and special distributions from development projects.

Including Equiton in your investment strategy can help create true diversification. Each Fund is unique and offers full transparency and the benefits of real estate investing without the hassles of financing, tenant management, building maintenance or project management. Contact us today to learn more about our private real estate investment solutions and how you can benefit from private REITs.

Further reading: Click here for more information about investing with your TFSA and RRSPs.