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All about the First Home Savings Account (FHSA)

What is an FHSA?

An FHSA is a registered savings account that allows prospective first-time home buyers to save up to $40,000 that can be used toward the purchase of a home. Contributions made to the FHSA are tax-deductible and withdrawals used to purchase a first home, including the investment income, are non-taxable.

Who qualifies for an FHSA?

To open an FHSA, a member must be 

  • a resident of Canada 
  • at least 18 years of age
  • a first-time home buyer

A first-time home buyer is defined as an individual who has not owned a home in which they lived at any time during the calendar year prior to opening the account, or at any time during the preceding four calendar years.

Is there a limit to how much a member can contribute to an FHSA?

Annual contributions are capped at $8,000 with a lifetime contribution limit of $40,000. 

Unused contribution room from one year can be carried forward to the next year. So, for example, if an individual contributed $2,000 one year, they could carry an additional $6,000 into the next year, making their annual contribution limit a total of $14,000 that year.

You can open more than one FHSA, but the total annual contribution remains $8,000 per year.

How does the FHSA work, exactly?

You can have an FHSA for a maximum of 15 years, or until you turn 71 years old, whichever comes first. The account can remain open during that time, or until the end of the year following a qualifying withdrawal for the purchase of your first home. To make a qualifying withdrawal, you must 

  • be a resident of Canada purchasing your first home 
  • have a written agreement to buy or build a home in Canada before October 1 of the year following the withdrawal
  • occupy that home as your principal place of residence within one year of purchase or building

You may make a qualifying withdrawal from your FHSA all at once or in a series of withdrawals.

Any savings you don’t use to purchase or build your first home can be transferred to a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF). Funds will be subject to tax upon withdrawal from those accounts, according to the applicable rules. If you choose to withdraw unused savings from the FHSA, those funds would be subject to taxes at the time of withdrawal.

Interested in learning more?

The FHSA is expected to launch sometime in 2023. Learn more about the tax-free FHSA program. 

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