NEW: As of April 1, 2023
First Home Savings Account (FHSA) – a registered account offered by the federal government to help first time home buyers save for their first home tax-free.
You can combine tax-free withdrawals from your FHSA and RRSP for your first home as long as you meet all the conditions for each withdrawal.
Who can open a FHSA?
A resident of Canada who is 18 years or older and has never owned property before (first time home buyer).
How to open a FHSA?
Ask your bank about opening a FHSA account for you. Qualified FHSA issuers include banks, trust companies, credit unions and insurance companies; however, even though FHSAs became available on April 1, not all authorized issuers are set up to open the accounts just yet.
Note: There are three types of FHSAs that can be offered. Ask your issuer to discuss options with you.
– Depositary FHSA
– Trusteed FHSA
– Insured FHSA
How much can you contribute to your FHSAs*?
From the year you open your first FHSA, you can contribute:
$8,000 annually,
up to a $40,000 lifetime limit.
*If you have more than one FHSA, the amounts you contribute to each account combined must be within the limits above. Generally, you will be taxed on FHSA amounts in excess of your contribution limit.
Withdrawing from your FHSA for your first home (a checklist):
Complete Form RC725 (Request to Make a Qualifying Withdrawal from your FHSA) for your FHSA issuer, ensuring you’ve met the following criteria–
– You are a first time home buyer and a resident of Canada
– You have a written agreement to buy or build a qualifying home with a completion date before October 1 of the year following the withdrawal
– You must not have acquired the home more than 30 days before making the withdrawal
– You must intend to occupy the qualifying home as your principal residence within one year after buying or building it
When to close your FHSA?
You should close all your FHSAs before your maximum participation period ends… so, when’s that? It depends:
Your maximum participation period begins when you open your first FHSA and ends the year in whichever of three possible events occurs first:
– The year following your first qualifying withdrawal from your FHSA (you withdraw the money to put towards your first home)
– The 15th anniversary of opening your first FHSA
– You turn 71 years of age
And that’s the FHSA in a nutshell! We hope you found this post helpful.
More resources:
Click here for more information on FHSAs from the federal government.
Learn more about the First Time Home Buyers’ Program in BC here.
Get a digital copy of our free guides here.
If have any questions about the market, please don’t hesitate to reach out.
We’re here to help.
Thank you for being here,
Alex Hughes* and Ricki-Lee Jewell, Victoria, BC Real Estate Agents
*Personal Real Estate Corporation
