Invest in Private Real Estate with Your TFSA (2024)

Published On: November 29, 2023Categories: Insights

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.

Related Posts

  • Understanding RESPs: A Comprehensive Guide to Maximizing Your Child’s Education Savings

    10:55 am|0 Comments

  • 10 Things You Should Know About the First Home Savings Account (FHSA)

    12:22 pm|0 Comments

  • Unlocking the Power of RRSPs: The Ultimate FAQs Answered

    2:29 pm|0 Comments

  • Why you Need to have Both Savings and Investments

    9:51 am|0 Comments

Invest in Private Real Estate with Your TFSA (2024)


Invest in Private Real Estate with Your TFSA? ›

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.

Can I hold a reit in my TFSA? ›

Thankfully, they can be safely held in registered accounts such as a TFSA, RRSP, RRIF, and the like. By housing your REIT investments in one of these tax-advantaged accounts, you can better optimize your portfolio.

Can you put private equity in TFSA? ›

For long-term investing

Helping businesses grow takes time. That's why the account types in which private equity can be held are ones typically used for long-term investing: RRSP, TFSA, or Non-registered accounts.

What is the danger zone for TFSA? ›

One financial planner calls the first four months of the year a “danger zone” for making deposits to tax-free savings accounts. During this period, Canada Revenue Agency info that shows TFSA contribution room for the current calendar year can be based on incomplete information.

How to grow money in TFSA? ›

A key strategy is to contribute early, so your investments have more time to grow. Make sure you're consistently contributing to your TFSA by enabling automated deposits into your account. This will keep your TFSA growing in a tax-free environment. Remember to ensure that you stay within your contribution room.

Are US dividends taxed in a TFSA? ›

U.S. stocks held in a TFSA are subject to 15% withholding tax on U.S. dividend income. Withholding tax would apply to other foreign stocks held in a TFSA, with rates starting at 15%, depending on the country. Only Canadian stocks are not subject to withholding tax on their dividends inside a TFSA.

What is the best account to hold a REIT in? ›

If you're going to have REITs in your portfolio, having them in a tax advantaged account like a Roth IRA is best. If you want a more hands-on option you can opt for a self-directed IRA.

Can you use TFSA as collateral? ›

Since withdrawals from a TFSA are not taxed, your TFSA can be used as collateral for a loan or line of credit. You can't do that with your RRSP. If you did, your RRSP would be taxed. There are no spousal TFSAs, but a spouse or common- law partner can give the other partner funds to contribute to their TFSA.

What is the lifetime limit for TFSA? ›

It also means that starting on January 1, 2024, eligible Canadians will now have a cumulative lifetime TFSA contribution limit of $95,000 (see “What is the lifetime contribution limit for TFSA?” below for examples and charts).

Can you put dividends in a TFSA? ›

Generally, interest, dividends, or capital gains earned on investments in a TFSA are not taxable either while held in the account or when withdrawn. There are, however, certain circ*mstances under which one or more taxes could be payable with respect to a TFSA.

Can I put 50k in my TFSA? ›

Your TFSA lifetime contribution limit is $95,000. Your ongoing contribution amount. There is new contribution room every year. For 2024, you can contribute up to $7000 plus any unused contribution room from previous years.

What happens if TFSA grows beyond limit? ›

At any time in the year, if you contribute more than your available TFSA contribution room you will have to pay a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account.

Can you have US stocks in your TFSA? ›

U.S. stocks held in a TFSA are subject to 15% withholding tax on U.S. dividend income. Withholding tax would apply to other foreign stocks held in a TFSA, with rates starting at 15%, depending on the country. Only Canadian stocks are not subject to withholding tax on their dividends inside a TFSA.

What are common mistakes in TFSA? ›

The most common TFSA mistake

If cash makes up the majority of the money you have in your TFSA, you aren't doing it right. But don't worry! You're not alone in making this mistake. Despite its name, a TFSA is not meant to function as a traditional savings account.

Can I buy any stock in TFSA? ›

Only “qualified” investments can be held and traded in a TFSA. These include: cash, GICs and other deposits. most securities listed on a designated stock exchange, such as shares of corporations, warrants and options, and units of exchange-traded funds and real estate investment trusts.

How often can I buy and sell stocks in a TFSA? ›

Trades within your TFSA can be made as often as you like, without having to pay a capital gains tax. However, note that conversely you cannot use capital losses on investments in your TFSA to offset the gains.


Top Articles
Latest Posts
Article information

Author: Edwin Metz

Last Updated:

Views: 5861

Rating: 4.8 / 5 (78 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Edwin Metz

Birthday: 1997-04-16

Address: 51593 Leanne Light, Kuphalmouth, DE 50012-5183

Phone: +639107620957

Job: Corporate Banking Technician

Hobby: Reading, scrapbook, role-playing games, Fishing, Fishing, Scuba diving, Beekeeping

Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.