September 1, 2023

How does the FHSA (First Home Savings Account) Work? What are some technical highlights?

The FHSA is a type of account recently created by the government to encourage and assist Canadians to save for their first home. In a post last week, we discussed the factors that can determine whether or not you may be eligible to open a First Home Savings Account – and this week, we are exploring some technical highlights of the FHSA:

  • Contributions are tax deductible (similar to the contributions you may make to an RRSP). Like RRSPs, you do not have to claim a deduction for that year; for example, you can carry forward undeducted contributions indefinitely, for the lifetime of the account. However unlike RRSPs, contributions made within the first 60 days of a calendar year cannot be attributed to the previous tax year.

  • The FHSA holds an annual contribution limit of $8,000, with a lifetime limit of $40,000

  • The FHSA has a lifespan of 15 years; so, if the funds within your FHSA are not used to buy a home within that time period, they must be transferred to an RRSP or RIF. A transfer to an RRSP or RRIF can be done tax-free – and transfers do not reduce or limit your available RRSP contribution room. Another alternative is that you may simply withdraw the funds, which will then be included as part of your taxable income for that year. Please note: if you withdraw funds from your FHSA, taxes will be withheld – so this option isn't recommended as an ideal route.

  • Money invested into the FHSA can grow tax-free, and comes out tax-free (when extracted as a qualifying withdrawal).

  • The FHSA complements the “First-Time Home Buyers” program available with an RRSP.  It does not replace it. You may use both when purchasing your first home. 

  • There is no "minimum" quantity set for how long (the number of days) the contributions must stay within the FHSA, before they can be used for a qualifying withdrawal.


NOTE: the above points are "snapshot" highlights – please do not regard this is an exhaustive list of the "ins and outs" of the FHSA.


For a more in-depth conversation about the FHSA, reach out to one of our advisors in Huntsville, Powassan, Parry Sound, Orillia, or North Bay, today.

- Spire Advisors of Assante Capital Management Ltd.

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