FHSA: the account to buy your first home

Who can open one

According to the CRA, when you open it you must, among other things:

• live in Canada;
• have reached the age of majority in your province, without exceeding the maximum age set by the CRA;
• be a first-time home buyer: not have lived, as your principal residence, in a home owned by you or your spouse, during the current year or the previous four calendar years.

The FHSA has existed since April 1, 2023.

Limits and carry-forward

You can contribute up to $8,000 a year, and up to $40,000 in total. Room starts in the year you open your first FHSA, not before.

Unused room from one year carries forward to the next, up to $8,000. Opening an account early therefore lets you start building room, even without contributing right away.

What it changes for tax

• Contributions are generally deductible from your income, like an RRSP.
• A qualifying withdrawal to buy a first home is not taxable, if all the conditions are met.
• You can also use your RRSP's Home Buyers' Plan (HBP) for the same home.

If you do not buy

Under certain conditions, the funds can be transferred directly to an RRSP without reducing your RRSP room. If you withdraw the money yourself, the withdrawal is taxable.