Date Posted: April 19, 2023
The First Time Home Buyers Savings Account (FHSA) in Canada is a type of account that offers tax benefits and helps first-time homebuyers save money towards their first qualifying home purchase. Contributions made to the FHSA account are tax-deductible, similar to an RRSP, and qualifying withdrawals for purchasing a first home are non-taxable, similar to a TFSA. However, with an FHSA and unlike the Home Buyers’ Plan, the funds do not need to be paid back.
Individuals who are 18 years or older, Canadian residents and first-time homebuyers are eligible to open an FHSA account.
The account can stay open for 15 years, until the end of the year that you turn 71, or at the end of the year following the year in which you make a qualifying withdrawal from an FHSA for the first home purchase, whichever comes first.
Contributions and Deductions
If the savings in the account are not used for a qualifying home purchase, they can be transferred to an RRSP or RRIF account on a non-taxable basis. The funds transferred to an RRSP or RRIF will be taxed upon ultimate withdrawal. If not transferred but instead withdrawn, FHSA funds would be subject to taxes.
What is a qualifying withdrawal?
How is the FHSA different from the Home Buyer’s Plan?
With the current Home Buyers' Plan, Canadians can withdraw up to $35,000 from their RRSP subject to eligibility and conditions, then pay back the funds to their RRSP over 15 years.
Unlike the Home Buyers’ Plan, with an FHSA, the funds do not need to be paid back.
Our brokers are here to guide you on which investment option, or combination of options, will help you reach your home ownership goals.
If you want to know more about the FHSA - contact a mortgage broker today.