The First Home Savings Account (FHSA) allows Canadians to save for their first house. The FHSA combines the features of a RRSP and TFSA. Like an RRSP, contributions would be tax-deductible and qualifying withdrawals to purchase a first home would be non-taxable, like a TFSA.
You can use it in combination with Home Buyers’ Plan (HBP) – a withdrawal up to $35,000 from your RRSP. The difference, however, is that with the FHSA the funds do not need to be paid back, unlike the HBP/RRSP, which need to be paid back over 15 years after using the RRSP funds to buy a home.
Who is eligible?
- Canadian
- 18+
- First-time homebuyer
Who can contribute?
Only the account holder can contribute funds to their FHSA.
A family member or spouse cannot make contributions. However, if a family member or spouse gifts the account holder money, the account holder can then use those funds to deposit into their FHSA.
How much can I contribute?
Eligible Canadians can contribute $8,000 annually, to a lifetime maximum of $40,000.
How do I use the funds in my FHSA?
You must use the funds in your FHSA to purchase your first home within 15 years of opening the plan (or by the end of the year you turn 71, whichever comes first).
All contributions as well as any investment income or growth generated by funds invested in the FHSA can be used towards the purchase of a qualifying home.
What if I don’t use my FHSA to buy a home?
If you don’t use your FHSA to buy a home, you can transfer the funds to an RRSP (or RRIF). This would not impact your RRSP’s available contribution room.
Funds withdrawn for any purpose other than to purchase a qualifying home will be fully taxable, unless transferred to an eligible retirement account noted above.
For more information on the FHSA, I invite you to visit this website to answer some common questions about the structure of the new FHSA.
Investia does not currently offer FHSA account openings, however we hope to add it to our offerings in late 2023/early 2024.