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What do I need to know about the FHSA to buy my first home?

Here are the eligibility criteria for the Tax-Free First Home Savings Account (FHSA)

  • Be a Canadian resident and at least 18 years old. 
  • Like the Home Buyer’s Plan (HBP), you must not have lived in a property you owned in the year you open the account or in the four previous calendar years. 
  • You must not have previously used the FHSA to buy a home. 

 

Is there a maximum contribution limit? 

  • Whether you have one or more FHSAs, the maximum contribution limit is $8,000 per year per person.  
  • The lifetime contribution limit is $40,000 per person. 

 

Good to know 

  • These amounts will not be adjusted for the cost of living or inflation
  • You can only use the FHSA to buy a property once
  • When you withdraw funds from your FHSA for a home purchase, you have 12 months to close all your FHSAs.  

 

Is there a time limit to use your FHSA?

The FHSA can stay open for a maximum of 15 years. After that, the funds will have to be used to buy a home or be transferred to an RRSP or RRIF. The funds can also be withdrawn, but they will be taxed. 

 

Does my contribution limit carry over from one year to the next? 

Unlike a TFSA or RRSP, unused annual contribution room cannot be carried over to a future year.  

 

Example 

If you contribute $6,000 in the first year, you lose the $2,000 of unused contribution room for that year. However, you can still save up to $40,000.   

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