Get closer to home ownership with tax-free savings
The First Home Savings Account (FHSA) is a new type of registered plan that’s designed to help you save for your first home, tax-free.
Key benefits:
- Contributions to a FHSA reduce taxable income
- Possibility to participate in the HBP and FHSA to purchase a qualifying home
- No limit for qualifying withdrawals
Key features:
- Annual Contribution limit of $8,000
- Lifetime contribution limit of $40,000
- Income earned is also tax-free
- A tax-free transfer of funds from RRSP to a FHSA is permitted, subject to limits
Who Qualifies for FHSA?
The key to realizing your dream
To open a FHSA, you must be:
- At least 18 years of age and no less than the age of majority in the province where you live
- A Canadian resident
- A first-time homebuyer
FHSA vs RRSP
First Home Savings Account vs Retirement Savings Plan
A TFSA is a savings option that allows you to access funds, without penalty, when you need them. While an RRSP is more of a long-term savings option for retirement, where early withdrawals are taxed.
First Home Savings Account:
- Savings grow tax-free
- Tax-free investment earnings and withdrawals when used to buy your first home
- Contributions reduce taxable income.
Retirement Savings Plan:
- Investment income earned can grow tax-deferred
- Tax breaks for annual contributions
- No tax on earnings
- Contribute to a spousal RRSP
Smart investing
Pay less income tax and more
Invest your hard-earned money, grow it tax-free, and withdraw it when you find your first home. Enjoy tax-free qualified withdrawals. Unlike an RRSP, qualified withdrawals from your FHSA to buy a home won’t be taxable.
Contributions can be used as deductions against your earned income, lowering the tax you pay when you file your return. And like a TFSA, your investment earnings won’t be taxed either.
You can keep your FHSA open for 15 years, but if you don’t end up buying a home, you can transfer your FHSA savings to an RRSP or RRIF without paying taxes on the transfer.
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