Canada's First Home Savings Account (FHSA)
The FHSA is a new tax-free savings plan proposed in the 2022 Federal budget to help Canadians save for their first home. Even if you already own a home, these new accounts are very generous and should be used whenever possible. For example, opening an account for your adult children would be a great strategy. These accounts will be available later this summer once the government and financial institutions are ready.
What is an FHSA?
These new accounts will give prospective first-time home buyers the ability to save $40,000 on a tax-free basis, combining the most attractive features of an RRSP and a TFSA – your contributions are deductible (like an RRSP) and withdrawals to purchase a first home will be non-taxable and you are not required to refund the amount (like a TFSA) – the best of both worlds!
What are the basic rules?
You must be a resident of Canada and be at least 18 years of age.
You qualify as a first-time home buyer if you or your partner have not owned a home in the preceding 4 calendar years.
The annual contribution limit is $8,000.
The lifetime contribution limit is $40,000.
You can carry-forward unused contribution room.
You can only keep an FHSA open for 15 years.
Any savings not used to purchase a home can be transferred into an RRSP and not count to RRSP contribution room.
How does the FHSA differ from the Home Buyers Plan?
With the Home Buyers Plan, first-time home buyers can withdraw up to $35,000 from their RRSP’s, then must pay back the funds to their RRSP over a 15-year period. With an FHSA, the money contributed can grow to an unlimited amount for use to buy a home, and it does not have to be paid back.
If you would like to know when the program is launched join our mailing list.
Please don’t hesitate to contact us to if you have any questions about the program in the interim.