FHSA
First
Home
Savings
Account
FHSA Summary
The First Home Savings Account (FHSA) is a registered plan designed to help first-time home buyers save for a qualifying home purchase by combining the main advantages of both an RRSP and a TFSA. Contributions are tax-deductible, allowing clients to reduce their current taxable income, while qualified withdrawals for a first home are completely tax-free, including all investment growth. The plan is subject to annual and lifetime contribution limits and can hold a variety of investments, including segregated funds, mutual funds, ETFs, and GICs. If the funds are not used to purchase a home, they can generally be transferred on a tax-deferred basis to an RRSP or RRIF, making the FHSA a highly flexible and tax-efficient savings tool for young professionals and individuals planning for home ownership.
Plus Points
Combines the best tax features of RRSPs and TFSAs
Provides a powerful down-payment savings tool
Offers flexibility if the client does not end up buying a home
Can be used together with the RRSP Home Buyers’ Plan (HBP)
Helps reduce current income tax while building tax-free housing capital
Objective
The objective of the FHSA is to help first-time home buyers save for the purchase of a qualifying home by combining the tax-deductibility of RRSP contributions with the tax-free withdrawals of a TFSA.
Key Features
Contributions are tax-deductible
Qualifying withdrawals for a first home are tax-free
Subject to annual and lifetime contribution limits
Investment growth is tax-free if used for a qualifying home purchase
Can remain open for a limited number of years after opening
Unused funds can be transferred tax-deferred to an RRSP or RRIF
Can hold qualified investments, including segregated funds, mutual funds, ETFs, and GICs
Best For
First-time home buyers
Young professionals and couples
Clients saving for a medium-term goal (home purchase)
Individuals in moderate to high tax brackets who want deductions now
Who Can Open
Canadian residents
Individuals 18 to 71 years old
Must meet CRA’s definition of a first-time home buyer
Must have a valid Social Insurance Number (SIN)