First Home Savings Accounts (FHSA)
Oct 20, 2022
Are you saving to buy your first home? Are you a parent looking to help your children with a down-payment on their first home? If so, here are 5 things you should know about the new Tax-Free First Home Savings Account (FHSA) announced in the 2022 Federal Budget.
1.) Who can open a FHSA?
To open a FHSA, an individual must be:
A.) A resident of Canada
B.) 18 to 71 years of age
C.) Have not owned a home in the year the account is opened or the preceding 4 calendar years.
2.) What is the benefit of opening a FHSA?
Contributions to the FHSA are tax-deductible, reducing taxable income, and withdrawal(s) towards purchasing a home as a first-time home buyer are not taxed and do not need to be repaid.
3.) How does the FHSA compare to other ways of saving for a home like a TFSA or RRSP?
Here is a helpful summary comparing the various options:
4.) How much can you contribute to a FHSA?
There is an annual contribution limit of $8,000, with a lifetime maximum of $40,000. An individual is allowed to carry-forward unused portions of their annual contribution limit up to a maximum of $8,000. Eg. Contributing $5,000 to a FHSA in 2023, would mean an allowable contribution of $11,000 in 2024 ($8,000 for 2024 + $3,000 from 2023). Carry-forward only begins to accumulate once a FHSA is opened.
5.) When can I open a FHSA and when must the plan be closed?
Most institutions plan to make this available sometime in 2023.
A FHSA must be closed at the earlier of:
• The year the account holder turns 71 or
• 15 years after the account is opened
Talk to your RGF Integrated Wealth Management advisor if opening a FHSA fits into your overall financial plan.
1.) Who can open a FHSA?
To open a FHSA, an individual must be:
A.) A resident of Canada
B.) 18 to 71 years of age
C.) Have not owned a home in the year the account is opened or the preceding 4 calendar years.
2.) What is the benefit of opening a FHSA?
Contributions to the FHSA are tax-deductible, reducing taxable income, and withdrawal(s) towards purchasing a home as a first-time home buyer are not taxed and do not need to be repaid.
3.) How does the FHSA compare to other ways of saving for a home like a TFSA or RRSP?
Here is a helpful summary comparing the various options:
4.) How much can you contribute to a FHSA?
There is an annual contribution limit of $8,000, with a lifetime maximum of $40,000. An individual is allowed to carry-forward unused portions of their annual contribution limit up to a maximum of $8,000. Eg. Contributing $5,000 to a FHSA in 2023, would mean an allowable contribution of $11,000 in 2024 ($8,000 for 2024 + $3,000 from 2023). Carry-forward only begins to accumulate once a FHSA is opened.
5.) When can I open a FHSA and when must the plan be closed?
Most institutions plan to make this available sometime in 2023.
A FHSA must be closed at the earlier of:
• The year the account holder turns 71 or
• 15 years after the account is opened
Talk to your RGF Integrated Wealth Management advisor if opening a FHSA fits into your overall financial plan.
Popular Categories
Search Insights
Book a meeting
Schedule a meeting with an RGF Advisor.
