WHAT IS THE FIRST HOME SAVINGS ACCOUNT?

Author: Boychuk Mortgage Group |

The First Home Savings Account (FHSA) in Canada is a tax-advantaged savings plan designed to help Canadians save for their first home. Here are the key features of the FHSA:

  • Eligibility: Available to Canadian residents who are at least 18 years old and have not owned a home in the last four years.
  • Contribution Limits: You can contribute up to $8,000 per year to a maximum lifetime contribution limit of $40,000.
  • Tax Benefits: Contributions are tax-deductible, meaning they can reduce your taxable income, similar to an RRSP (Registered Retirement Savings Plan). Additionally, the investment growth and withdrawals for the purpose of purchasing a first home are tax-free, similar to a TFSA (Tax-Free Savings Account).
  • Qualified Investments: Funds in an FHSA can be invested in a variety of eligible investments, including stocks, bonds, mutual funds, and GICs (Guaranteed Investment Certificates).
  • Withdrawal Conditions: Withdrawals are tax-free when used to purchase a qualifying first home. If the funds are not used for a home purchase, they can be transferred to an RRSP or RRIF (Registered Retirement Income Fund) on a tax-free basis, subject to RRSP contribution limits.

The FHSA aims to make it easier for Canadians to save for their first home by combining the benefits of both RRSPs and TFSAs

READ MORE BLOG ARTICLES