What is the FHSA ? - For a first home

- Mario Conte - November 3, 2023

The Tax-Free Savings Account for the Purchase of a First Property (FHSA) is an advantageous solution for those who dream of becoming owners. It was designed to help future homeowners set aside money for their down payment while benefiting from a tax exemption on the interest generated by these savings. One of the big advantages is that neither the interest accrued nor withdrawals from the account are subject to tax. In addition, by contributing to a FHSA, contributions are deductible from your tax return, thus allowing your money to grow more quickly than in a traditional savings account.

To open a FHSA, you must be a resident of Canada and at least 18 years old. In addition, neither you nor your spouse must have owned a principal residence during the year the account was opened or during the previous four years. Regarding contributions, you have the right to add up to $8,000 per year, with the possibility of carrying over unused contribution room from one year to the next, up to a maximum amount of $8,000. However, it is essential to note that the total lifetime contribution limit for FHSA is $40,000.

In addition, an interesting option for future owners is to combine the benefits of FHSA with those of the Home Ownership Plan (RAP). The HBP offers you the possibility of withdrawing up to $35,000 from your RRSPs to purchase a house. However, it is crucial to remember that the amounts withdrawn through the HBP must be repaid within 15 years. Together, FHSA and HBP can play a crucial role in making your property dream come true.

FHSA vs HBP: What are the main differences?

What is the difference between a FHSA and a HBP? And which one should you choose? It depends on your savings goals, as well as your financial and tax situation.

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