The Tax-Free First Home Savings Account (FHSA) is an investment arrangement available to Canadian residents aged 18 or older, that allows first-time home buyers a tax advantage option to save for a down payment.
Contributions to an FHSA may only be made by the holder of the account. However, individuals may gift their spouse or common-law-partner with money to make a direct contribution to their FHSA without triggering income attribution rules.
The maximum FHSA contribution dollar limit for 2023 and subsequent years is $8,000 subject to a lifetime contribution limit of $40,000. The annual limit is not income tested and is not based on the holder’s earned income like an RRSP.
You can carry forward up to $8,000 in unused contributions, subject to the lifetime limit. Carry forward room begins once the FHSA is opened. As with the RRSP, FHSA contributions are tax-deductible. For every dollar you place in your FHSA, you can take a deduction against your income in the year of deposit, or you can carry forward your un-deducted contributions indefinitely to claim in a future tax year.
Withdrawals
A qualifying withdrawal is non-taxable to you as the holder. Certain conditions must be met for you to receive the withdrawal tax-free. The withdrawal must be made in prescribed form, provided by the CRA, and include you meeting all the following terms:
• First-time home buyer • Resident of Canada • The withdrawal is made within 30 days of moving into the home • Has written agreement to buy or build a qualifying home before October 1st of the year following the withdrawal • The qualifying home is in Canada
A qualifying withdrawal does not generate taxable income and does not affect any income tested benefits or credits of the holder. If you don’t use the full amount of your FHSA towards a qualifying withdrawal, amounts remaining after making a qualified withdrawal can be transferred, tax-free, to an RRSP or RRIF in your name. The transfer must take place by the end of the year following the qualifying withdrawal.
Qualifying FHSA withdrawals do not impact eligibility for income-tested benefits and credits (e.g., OAS, GIS, Age Credit, HST/GST, EI, Canada Child Benefit, or the Canada Worker’s Benefit (CWB), formerly known as the Working Income Tax Benefit).
Eligibility
An FHSA is available to individuals who meet all the following requirements
• Is a resident of Canada at the time of purchase; • Is between the ages of 18 to 71; • Has a valid SIN, and • Is a first-time home buyer
A first-time home buyer means that you or your spouse or common law partner have not owned a home, in which you lived in, any time during the year the account is opened or at any time in the preceding four calendar years.
As holder and owner of the FHSA, you can have as many accounts as you wish as long as you do not exceed the annual and lifetime limits as provided by the Canada Revenue Agency (CRA).
Qualified Investments
These types of eligible investments are restricted under the Income Tax Act, and include:
Term deposits and GICs
Variable interest savings accounts
Mutual Funds*
Publicly traded securities*
Bonds*
Looking for more information?
To learn more about the Tax-Free First Home Savings Account (FHSA), please visit the Canada.ca website.
*Mutual funds and other securities are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.
*Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc).
Commissions, trailing commissions, management fees, and expenses, all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated.
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