Last Updated on July 13, 2023
Everything You Need To Know About The First Home Savings Account (FHSA)
Post by RyanSellers.com Real Estate Group
First Home Savings Account (FHSA)
An First Home Savings Account (FHSA) is designed to help you save for your first home, tax-free. Like a registered retirement savings plan (RRSP), contributions to an FHSA will be tax deductible. Like a tax-free savings account (TFSA), withdrawals to purchase a qualifying home will be non-taxable.
Who Is Eligible To Open An FHSA?
The federal government has provided criteria for who can open an account and what counts as a qualifying withdrawal.
You're a Canadian resident and you've reached the age majority in your province or territory
The Income Tax Act requirement to open an FHSA is minimum age 18, but a holder must be at least age 19 to open an FHSA securities account in provinces where age-of-majority is 19 years.
You're an eligible first-time homebuyer who hasn’t lived in a qualifying home in the current or past 4 calendar years
A “qualifying home” is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
Types Of FHSA
an account (with a financial institution) that holds money, term deposits, or guaranteed investment certificates (GICs)
a trust (with a trust company as trustee) that holds qualified investments such as money, term deposits, GICs, government and corporate bonds, mutual funds, and securities listed on a designated stock exchange
an annuity contract (with a licensed annuity provider)
How to open an FHSA
You can open an FHSA through an FHSA issuer such as a bank, credit union, or a trust or insurance company. Your issuer will advise you on the types of FHSAs and the qualified investments they can contain.
You can have more than one FHSA at any given time, but in order to avoid unintended tax consequences, the total amount you can contribute to all of your FHSAs and transfer from your RRSPs to all your FHSAs in a calendar year cannot be more than your FHSA participation room for that year.
- your social insurance number
- your date of birth
- any supporting documents your issuer may need to certify that you are a qualifying individual
For more information about the FHSA, please visit the Government of Canada website.