What Is an FHSA?
An FHSA (First Home Savings Account) is a Canadian account for saving towards a first home. Contributions are tax-deductible like an RRSP’s, and withdrawals for a qualifying home purchase are tax-free like a TFSA’s. You can put in $8,000 a year, up to $40,000 in total.
Who can open one
A Canadian resident aged 18 or older (or the age of majority in their province) who is a first-time home buyer: neither they nor their spouse or common-law partner lived in a home they owned in the current year or the four years before.
The account can stay open for up to 15 years, or until the end of the year you turn 71, whichever comes first.
Limits and carry-forward
Room starts when the account is opened, not before, so opening one early starts the clock. Up to $8,000 of unused room carries forward to the next year, so the most you can contribute in one year is $16,000. The lifetime total is $40,000.
Like a TFSA it can hold cash, GICs, stocks and ETFs. Contributions can be deducted in the year they are made or saved for a later year with a higher income.
If you don’t buy a home
The balance can be moved to an RRSP or RRIF tax-free, without using any RRSP room. Withdrawn any other way, it is taxed as income.
An FHSA can be combined with the RRSP’s Home Buyers’ Plan for the same purchase, which is why many first-time buyers fill the FHSA first, then the TFSA or RRSP.
Put it to use
Canadian ETFs →Canada’s economy and the Bank of Canada rate →General information, not investment advice.