New in 2023, the First Home Savings Account is a way to save for the purchase of a qualifying first home. Plan holders benefit from their contributions being tax deductible, tax free growth of contributed funds and withdrawals received tax-free.
To open a FHSA, you must be at least 18 years of age, not more than 71 years of age on December 31st of the year the plan is opened, a resident of Canada and a first-time home buyer. In certain provinces and territories, the legal age an individual can open a FHSA is 19 years old.
Your FHSA participation room in the year that you open your first FHSA is $8,000 and contributions are subject to a lifetime $40,000 limit. You can carry forward your unused FHSA participating room at the end of every year, up to a maximum of $8,000 to use in the following year. Any amount over and above your participation room is subject to a penalty tax of 1% per month on the highest excess FHSA amount in that month.
If you are making a qualifying withdrawal, you can withdraw all of the property from your FHSA tax-free. A qualifying withdrawal is a withdrawal from your FHSA where all of the following conditions are met:
The maximum length of time that you can participate in the FHSA begins when you open the FHSA and end on December 31st of the year in which the earliest of the following occurs:
To discuss opening a FHSA please contact us, and more information on the details of the plan can be found here.
Robin Muir, CFP®, CLU®, CH.F.C.