Your home ownership dreams may be closer than you think

In early 2022, the federal government announced a new way to help make home ownership a reality for more Canadians. The new Tax-Free First Home Savings Account (FHSA) will arrive in 2023 to help first-time home buyers save for a down payment.

How it works

Eligible contributors will be able to put away up to $40,000 (maximum of $8,000 per year) tax free into their FHSA. All contributions into the FHSA are tax-deductible, just like a Registered Retirement Savings Plan (RRSP) and there’s no tax implications when you’re ready to withdrawal. You’re getting the best parts of an RRSP and a Tax-Free Savings Account (TFSA) while saving for your first home!

The catch? There’s just one! The money in your FHSA must be used within 15 years to buy your first home.

Who’s eligible?

So far, we know you’ll qualify if:

You’re a Canadian resident
You’re at least 18 years old
You don’t own a home in the year your FHSA is opened or the previous four calendar years

Want to know more?

Additional details are expected to be announced by the federal government soon, so be sure to check back to learn more or you can register to be notified when more information is available.

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Frequently Asked Questions

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Can I open more than one FHSA?

Yes, but the contribution limits are per person, not per FHSA. This means the combined contributions to each plan can’t exceed the annual $8,000 or lifetime contribution limit of $40,000.
Can I transfer funds from my RRSP into my FHSA?

Yes, but if you transfer from your RRSP, you won’t benefit from the tax deduction, since you would have already received that when you made your initial RRSP contribution. It’s important to keep in mind that annual and lifetime contribution limits apply to transfers as well.
If I don’t make the maximum annual contribution of $8,000, does the leftover amount carry over into the next year?

Yes, you can carry forward any unused portion of your annual contribution limit up to a maximum of $8,000. This means that if you contribute less than $8,000 in a given year, you can contribute the unused amount in a subsequent year on top of your annual contribution limit (subject to your lifetime contribution limit).
My partner and I both have a FHSA. Can we combine them for the purchase of our home?

Absolutely! If two people are purchasing a home together, they can combine their own FHSA funds towards the purchase.
What if I need to withdraw the funds in my FHSA for a purpose other than purchasing my first home?

Withdrawals made for any purpose other than purchasing your first home will be fully taxable in the year the withdrawal was made.
What happens if I don’t use the funds in my FHSA within 15 years?

If your FHSA funds aren’t used within 15 years, you’ll have the option to transfer the accumulated funds into your RRSP or RRIF, even if you don't have contribution room. These sheltered transfers are not taxable, however subsequent withdrawals from those RRSP or RRIF plans are taxable as income upon withdrawal. If FHSA funds are not used or transferred after 15 years, you must withdraw the funds as taxable income and close the FHSA.
How is a FHSA different than the Home Buyers’ Plan (HBP)?

While the HBP is also a tool designed to help with the down payment for your first home, the funds (maximum of $35,000) come from your RRSP and must be paid back within 15 years. If you miss paying back your HBP, those missed payments are added to your income and you forfeit the accompanying contribution room in your RRSP. The amount you repay to your RRSP will eventually be taxed once you withdraw them, either through the RRSP or a RRIF, whereas the withdrawals from the FHSA are completely tax-free.
The main point to be aware of is that you can’t participate in the HBP and withdraw from your FHSA at the same time. You’ll need to determine which one is the best for you. For example, if you planned to purchase a home and you could only contribute $8,000 to your FHSA, but you already have significantly more funds in your RRSP, the HBP might be the right way to go. Chat with an advisor who can go over the benefits of each option with you.
How can I save in the meantime?

While the FHSA is expected to be available in 2023, you can start saving now for your first home by contributing to your TFSA or RRSP. Income generated from both plans are tax-sheltered and once the FHSA is available, you can simply transfer the funds from your TFSA or RRSP over to your FHSA.