First-Time Home Savings Account (FHSA) in Canada: Comprehensive Guide
Definition:
- Launched in September 2023 as a tax-advantaged account
- Designed to help first-time homebuyers accumulate down payment faster
Key Features:
- Annual contribution limit: 8,000 CAD
- Lifetime contribution maximum: 40,000 CAD
- Contributions fully tax-deductible, reducing taxable income
- Unused contributions can be carried forward to future years
- Funds withdrawn for home purchase completely tax-free
- Account valid for 15 years or until age 71
Eligibility Criteria:
- Canadian resident
- First-time homebuyer
- Age 18-71
- No primary residence ownership in past 4 years
- Not residing in spouse’s/common-law partner’s primary residence in past 4 years
Tax Advantages:
- Contributions are tax-deductible
- Investment earnings tax-exempt
- Compatible with Registered Retirement Savings Plan (RRSP)
Recommendation:
- Open account early, even without immediate contribution capacity. Start accumulating annual 8,000 CAD contribution room. Provides greater financial flexibility for future home purchase
If you need further assistance, feel free to reach out for help!
