First Home Savings Account (FHSA)

First Home Savings Account (FHSA)

Do you know about the First Home Savings Account?   If you are buying your first home, you absolutely need to know!

The First Home Savings Account (FHSA) is specifically designed to help first-time homebuyers save for their down payment, tax-free.

First Home Saving Account

It’s a fantastic deal:
  • Contributions to the account are tax-deductible, thereby reducing your taxable income and allowing you to pay less income tax!
  • The growth of your savings in the account is tax-free.
  • You can withdraw money from the FHSA when it’s time to buy your first home – completely tax free.
  • And you can start with as little as $250!

Another thing to consider is combining the First Home Savings Account (FHSA) with the Home Buyers’ Plan (HBP) to help you purchase a qualifying home. The Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your RRSP to buy a home. Keep in mind, you will need to repay the amount you draw for the Home Buyers’ Plan within 15 years back to your RRSP, PRPP or SPP.

If you are interested in creating a FHSA, there are a few things to note:

• This savings account is eligible to Canadian residents who are at least 18 years of age.
• You are a first-time homebuyer – you and/or your spouse or common-law partner have not owned a home where you lived in the year in which you open the account or at any time in the previous four years.
• Allows you to contribute tax-free for up to 15 years.
• The maximum contribution is $8,000 annually, plus up to $8,000 of your unused contribution room*.
• Maximum lifetime contribution limit is $40,000.
• Setting up automatic contributions can help you stay on track.

*You can carry forward any unused FHSA contribution room from the prior years up to a maximum of $8,000 (subject to your lifetime contribution limit of $40,000). Therefore, if you contribute less than $8,000 in a given year, you can contribute the unused amount in a subsequent year in addition to the $8,000 annual contribution limit for that year.

For full details about First Home Savings Account (FHSA) check the Government of Canada Savings and pension plans.

Check our other blogs under Real Estate 101 – that might give you answers about buying or selling a home.

Don’t hesitate to reach out to us if you’d like to discuss this option further!

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.