32 2333 18th Ave NE 4037350735 karleen.scase@scase.ca


First Home Savings (FHSA)

First Home Savings (FHSA)

What is a FHSA?

  • A registered account to set aside a maximum of $40,000 for a home purchase.

Who can open a FHSA?

  • At least 18 years of age
  • A resident in Canada
  • A First-time home buyer: Did not own a home in which they lived in in the current year when the account is opened or preceding 4 calendar years.

Contributions to a FHSA

  • Available since April 1, 2023
  • Contribution limits
    • Annual contribution limit $8,000
    • Lifetime contribution limit $40,000
    • Can carry forward unused contribution room.
    • There is a 1% tax on over contributions.
    • Interest on borrowed funds to contribute to a FHSA is not tax deductible.
  • Tax deductible in the year they are contributed but deduction can be carried forward indefinitely.
  • One can transfer from an RRSP to a FHSA but this would not reinstate the RRSP contribution limit
    • Caution as attribution rules still apply if spousal contributions to a RRSP in current or proceeding 2 years

Withdrawal from a FHSA

  • Withdrawal to purchase a qualifying home is tax-fee including investment income.
    • Non-qualifying withdrawals are included in income
  • The individual intends to occupy the home as their principal residence within one year after buying or building qualifying home
  • There is flexibility to withdraw the entire FHSA funds at once or in a series of draws
  • To note – starting after April 1, 2023 an individual can make both a FHSA withdraw and a home buyers plan withdrawal for the same qualifying home purchase.


Closing or winding up FHSA

  • The earliest of the year
    • In which the 15th anniversary after opening a FHSA occurs
    • In which the individual turns 71 years old
    • Following the first qualifying withdrawal
    • Savings not used to purchase a home can be transferred to a RRSP or RRIF
      • Transfers would no reduce or be limited by an individual’s available RRSP contribution room.
      • Individuals can also have the option to withdraw unused funds but such withdrawals are subject to tax.