FHSA
Have you heard about the FHSA? Dreaming of buying your first home? You’ll definitely want to get acquainted with this new financial product.
A new tool to help make your home ownership dream come true
A first home savings account (FHSA) is a registered plan which allows you, if you are a first-time home buyer, to save to buy or build a qualifying first home tax-free (up to certain limits).
What is the FHSA?
It’s a hybrid between the RRSP and the TFSA. Like in an RRSP, FHSA contributions are tax deductible and the income earned grows tax-free. And like in a TFSA, withdrawals from the FHSA are not taxable.
The main benefit of the FHSA over the Home Buyers’ Plan (HBP) is that you don't have to repay the funds you withdraw from the FHSA.
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RRSP |
TFSA |
FHSA |
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What is it?
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Registered retirement savings plan |
Tax-free savings account |
First home savings account |
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What is it used for?
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Saving for retirement/registered retirement income fund (RRIF)
Saving for a home/Home Buyers’ Plan (HBP)
Saving for education/lifelong learning plan (LLP) |
Complementary strategy/retirement, buying a first home, going back to school, sabbatical or maternity/paternity leave, travel, renovations or emergency fund |
Buying a first home |
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Contributions deductible from taxable income?
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Yes, up to the limit |
No |
Yes, up to the annual and lifetime limit |
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Withdrawals taxable?
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Yes * except HBP or LLP withdrawals |
No
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No, * unless the funds are used for something other than buying a home *Depending on the type of investments held |
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How withdrawals affect contribution room
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Annual contribution room limit must be respected |
Withdrawals will be added to next year’s contribution limit |
Withdrawals cannot be put toward future contribution room |
Who is eligible?
- Canadian residents
- People age 19 or older
- People not living in a principal residence they owned in the previous four calendar years
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What are the rules on contributions?
There are also a few things to keep in mind regarding contributions.
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Lifetime contribution limit |
$40,000 |
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Annual contribution limit |
$8,000 |
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Contributions carried forward to the following year |
Maximum $8,000 |
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Can you have multiple FHSAs? |
Yes* *Provided your total contributions do not exceed the annual and lifetime contribution limits |
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Eligible withdrawal for first home |
Non-taxable* *Taxable if withdrawal is not eligible |
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Transfer from RRSP to FHSA |
Non-taxable* *Subject to annual and lifetime limits |
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End of plan |
15 years after opening; or When you turn 71; or The year following your first eligible withdrawal Unused amounts must be transferred to an RRSP or RRIF or withdrawals will be taxable |
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Can you contribute via direct deposit? |
Yes |
Talking to an advisor pays off!
Talk to a wealth management advisor today about your homebuying plans. We’re here for you!
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With the experts in your corner, you’ll have the peace of mind you need to start looking for your dream house and purchase your first home!
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.
Online brokerage services are offered through Qtrade Direct Investing, a division of Aviso Financial Inc.