FHSA accounts explained

What’s an FHSA?

An FHSA stands for First Home Savings Account. An FHSA is a tax-free registered account with the federal government to help first time home buyers to save for a down payment.  

An FHSA has the advantage of combining some of the features of both an RRSP and a TFSA:

• Like an RRSP, contributions in an FHSA are tax-deductible, meaning you can claim an income tax deduction to reduce your taxes.
• Like a TFSA, withdrawals from an FHSA are not taxes.

Unlike a Home Buyers’ Plan (HBP), there is no obligation to pay withdrawals back to a FHSA. Within a FHSA account, revenues generated from investments such as capital gains, dividends or interests will not be taxed.

Who is eligible?

To open an FHSA account, one must be a Canadian resident, be 18 years of age or older, and buying a home for the first time.

What is allowed to be held in a FHSA?

Many other types of investment vehicles can be held within an FHSA account, including:

• Guaranteed investment certificate (GICs)
• Bonds
• Stocks
• Exchange traded funds (ETFs)
• Mutual funds

How much can you contribute?

Each year, one can contribute up to $8,000 to an FHSA, with a lifetime contribution limit of $40,000.

When can I contribute to an FHSA?

The available contribution room starts at the time of an FHSA account being opened. Up to $8,000 can be carried forward each year.