What is First Home Savings Account (FHSA)?
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The First Home Savings Account (FHSA) is a tax-advantaged savings plan introduced in Canada to help individuals save for their first home. It combines the benefits of a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP), making it an attractive option for first-time homebuyers.
Key Features:
- Eligibility:
- Must be a Canadian resident aged 18 or older.
- Must not have owned a home in the previous four calendar years.
- Contribution Limits:
- Annual contribution limit is $8,000.
- Lifetime contribution limit is $40,000.
- Unused contribution room can be carried forward to future years.
- Tax Benefits:
- Contributions are tax-deductible, like an RRSP.
- Withdrawals for purchasing a first home are tax-free, similar to a TFSA.
- Investment growth within the account is tax-sheltered.
- Use of Funds:
- Funds must be used to buy a qualifying home within 15 years of opening the account.
- If not used, the money can be transferred to an RRSP or RRIF without affecting contribution room or withdrawn (subject to tax).
Why Choose an FHSA?
The FHSA allows first-time buyers to grow their savings faster by taking advantage of both tax deductions and tax-free withdrawals. With flexible investment options, it’s a powerful tool to make homeownership more attainable in Canada’s competitive housing market.
If you’re planning to buy your first home, consider opening an FHSA to start building your savings today!