Advertisement
What is a first home savings account? It’s a registered account with tax-saving opportunities. But there’s more.
The federal government introduced a new registered account in its 2022 budget as a measure to help first-time home buyers save up for a down payment: the first home savings account (FHSA). Any deposits and withdrawals you make with an FHSA are tax-free, including any income you earn from interest, dividends or capital gains, as long as the funds are eventually used toward buying a home. FHSAs launched in Canada on April 1, 2023.
Here’s how it works: The FHSA has contribution room of $8,000 per year, up to a lifetime maximum of $40,000. Contribution room starts to accumulate as soon as you open the account, even if you don’t use it right away. Unused FHSA contribution room can be carried forward to the following year, up to a maximum of $8,000. So if you contribute $5,000 one year, you would be allowed to contribute up to $11,000 the following year.
If you don’t buy a home within 15 years of opening an FHSA, you must move the money and investments into a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF), unless you withdraw and pay taxes on the amount as income.
Example: “I’ve decided to save with an FHSA instead of an RRSP at this point, since I’m hoping to buy my first home in a few years.”
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
It’s a first among bank-owned discount brokers in Canada. With more banks likely to follow RBC's lead, what should...
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
Canada bank earnings remain on target, Dollarama’s expectations catch up to it, “insider selling” sets a new record, and...
Canada’s Big Six banks are releasing their quarterly earnings. Here’s what they said this week.
Bitcoin has soared into six figures as the post-election rally continues. What’s next for the digital currency?
Tax planning in Canada isn’t just for March and April. These smart tax moves need to be made before...
Allison resold her Eras Tour tickets instead of going to the concert. The resale website asked for her SIN,...
