Designed to assist Canadians looking to save for the purchase of their first home.
The Tax-Free First Home Savings Account (FHSA) is a new Federal program designed to assist Canadians in saving to purchase a home for the first time. Crowe MacKay’s trusted advisors review what a FHSA is, who is eligible, how to open a new account, and how to contribute to and make withdrawals from a FHSA.
What is a First Home Savings Account (FHSA)?
A FHSA is a new savings plan for Canadians that’s effective April 1, 2023. It allows prospective home buyers to save up to $40,000 on a tax-free basis. Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, and withdrawals to purchase a first home would be non-taxable, like a Tax-Free Savings Account (TFSA).
Qualified individuals can contribute up to an annual maximum of $8,000 to a FHSA with the lifetime maximum contribution being $40,000. The annual contribution limit counts for contributions made during the calendar year. Unlike a RRSP, contributions made within the first 60 days of a given calendar year cannot be attributed to the previous tax year.