The FHSA is a new registered account designed to help qualifying first-time home buyers1 save for their home, tax-free. Eligible individuals can contribute up to $8,000 per year, up to a lifetime maximum of $40,000.
To open an FHSA, you must be a Canadian resident between the ages of 18 and 71 years old and a “first-time homebuyer” – meaning you or your spouse or common-law partner did not own a qualifying home that you lived in as your principal residence in the year the account is opened or in any of the four preceding calendar years.
The FHSA can be used in combination with an RRSP Homebuyers’ Plan and your TFSA. Here’s how they compare:
|FHSA||RRSP Homebuyers’ Plan||TFSA|
|Contributions are Tax Deductible||Yes||Yes||No|
|Withdrawals For Home Purchase are Tax-Free||Yes, if they meet certain conditions 3 4||Yes, but must be paid back into your RRSP within 15 years 5 6||Yes|
|Unused Contributions Carry Forward||Yes, but you can carry forward a maximum of $8,000, for a maximum contribution of $16,000 in a given year||Yes||Yes|
|For 1st Time Homebuyers Only||Yes||Yes||No|
|Total Contribution Limit||$40K||$35K||Cumulative|
1 An individual is considered to be a first-time home buyer if they did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as their principal place of residence that either they owned or jointly owned, or their spouse or common-law partner (at the time the account is opened) owned or jointly owned.
2 Minimum investment value of $1,000 required. One winner will be selected to win up to a maximum value of $2,500 towards one month’s rental costs for the winner’s current residence. The winner must submit a verified photocopy of their original lease to confirm their monthly rent costs. Odds of winning a prize are dependent upon the number of entries received during the Contest Period. Terms and conditions apply. View full terms and conditions.
3 Withdrawals will only be tax-free if they meet certain conditions. This includes being a first-time homebuyer at the time you make the withdrawal, having a written agreement to buy or build your home before October 1 of the year after you make the withdrawal, and intending to occupy that home as your principal place. The home must be in Canada.
4 After making a withdrawal to buy your qualifying home, you will be required to close your FHSA by the end of the following year and will not be permitted to open another FHSA.
5 Amounts withdrawn under the HBP must be repaid to an RRSP within a maximum of 15 years, beginning as early as the second year following the year of withdrawal.
6 When the amount repaid to the RRSP is eventually withdrawn, it will be taxable at that time.