Home Savings
First Home Savings Account (FHSA)
Section titled “First Home Savings Account (FHSA)”About FHSA
Section titled “About FHSA”- Introduced by Canada in 2022
- Tax free registered account with goal to save and meet home ownership and investment goals
- Has features of a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP), the FHSA allows first-time home buyers to contribute up to $8,000 per individual, per year—and up to $40,000 in their lifetime.
- Need to be Canadian resident aged 18-71 and first home buyer
- The account can stay open for a maximum 15 years or until the end of the year you turn 71
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Use
- $8000 annual contribution allowed, unused contribution is carried forward
- $16000 yearly maximum contribution
Benefits
Section titled “Benefits”-
Withdrawals for purchase of a qualifying home and gains are tax free
- Withdrawals for other purchased are taxable
- A “qualifying home” is defined as a housing unit located in Canada. It also includes a share of the capital stock of a cooperative housing corporation, where the holder of the share is entitled to possession of a housing unit located in Canada.
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Benefit from income tax deductions for FHSA contributions made in the same or previous year
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Works well with other investment tools towards buying a home like bank services and Home Buyer’s Plan that allows Canadians to withdraw up to $35,000 from RRSP which require reimbursement back to the RRSP in 15 years.
- FHSA withdrawals for home buyers do not need to be paid back
Change in Intention to Buy a Home
Section titled “Change in Intention to Buy a Home”- Option to transfer to RSP or RIF if not withdrawing for other reasons
- Funds transferred to an RRSP or RRIF will be taxed upon withdrawal
Opening Account
Section titled “Opening Account”- SIN, Date of Birth, other supporting documents to certify qualification (resident)
- Designate beneficiary
- Fill out Schedule 15 - FHSA Contributions, Transfers and Activities
when you file your income tax and benefit return for the year that you
opened your first FHSA to let Canada know that you opened an account,
even if you did not contribute
- It will claim deductions if any
- Different FHSA with investment/trustee/insured restrictions exist or self-directed FHSA are possible
Investments in FHSAs
Section titled “Investments in FHSAs”-
Generally, the types of investments that are permitted in an FHSA are the same as those permitted in a registered retirement savings plan (RRSP) and tax-free savings account (TFSA). You may be required to pay taxes on some of the investments that are held in your FHSAs.
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The following are common types of qualified investments:
- cash
- mutual funds
- most securities listed on a designated stock exchange
- guaranteed investment certificates (GIC)
- Canada savings bonds and provincial savings bonds
- certain shares of small business corporations
Closing and When to Close FHSA
Section titled “Closing and When to Close FHSA”Your maximum participation period begins when you open your first FHSA and ends on December 31 of the year in which the earliest of the following events occur:
- the 15th anniversary of opening your first FHSA
- you turn 71 years of age
- the year following your first qualifying withdrawal from your FHSA
TD Bank Services
Section titled “TD Bank Services”- FHSA can hold:
- GIC
- Mutual funds