How does it work?
The FHSA offers potential first-time home buyers tax-deductibility on contributions made, like an RRSP. Furthermore, like a TFSA, any income, and capital gains inside the FHSA, as well as withdrawals towards the down payment of a first home, are tax-free.
To open a FHSA, you must be:
- An individual resident of Canada (in other words, a tax resident of Canada)
- At least 18 years of age, and not turning 72 or older in the year
- A first-time home buyer, meaning you and your spouse or common-law partner did not own a qualifying home that you lived in as a principal resident during any part of the calendar year before the FHSA account was opened, or any of the preceding four calendar years
How much can you contribute?
You can contribute up to $8,000 annually, up to a lifetime limit of $40,000. You can carry forward up to $8,000 of unused annual contribution room for use in later years (subject to the lifetime contribution limit). Carry-forward amounts do not begin to accumulate until the FHSA has been opened. It is possible to hold more than one FHSA, but the total contribution amount to all FHSAs cannot exceed the annual ($8,000) and lifetime ($40,000) contribution limits across all accounts.
What happens when you make a withdrawal?
Withdrawals are tax-free, under the following conditions:
- The qualifying home must be in Canada
- You are a resident in Canada from the time of the withdrawal to the acquisition of the qualifying home, and a first-time home buyer when you make the withdrawal
- There must be a written agreement to buy or build a qualifying house before October 1 of the year following the withdrawal, and you must intend to occupy the house as a principal residence within one year after buying or building
If there are funds left over after making a withdrawal, you can transfer them to another FHSA, RRSP, or RRIF on a tax-free basis, before the end of the year following the calendar year when the first qualifying withdrawal was made.
Start saving for your first home today!
When it comes to saving for a first home, we know that one-size-fits-all planning doesn’t work. That’s why we’ll assess your lifestyle, needs and goals to ensure that you get the right advice and solutions for your situation. Together, we’ll build your plan. A plan that puts your first home at the centre.
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Mutual funds are offered through Co-operators Financial Investment Services Inc. to Canadian residents except those in Québec and the territories. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Fund Facts before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated. The information contained in this communication was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This communication is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any mutual funds. We are not tax advisors and we recommend that clients seek independent advice from a professional tax advisor on tax related matters. Co-operators Financial Investment Services Inc. is committed to protecting the privacy, confidentiality, accuracy and security of the personal information that we collect, use, retain and disclose in the course of conducting our business. Please refer to our privacy policy for more information.
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