The FHSA - Key information
Buying a home is an important investment that can lead to one of your best investments for life. There are many potential buyers, but there are also many who are having trouble getting the down payment they need for such a large real estate purchase, especially with rising property prices.
Since the last election campaign, the Liberal government, under the leadership of Justin Trudeau, had mentioned the possibility of introducing an RDSP. This registered program would be dedicated to first-time buyers under the age of 40 to help them access their first home. However, the idea of the RDSP was abandoned and replaced by the FHSA or tax-free savings account for first-time home buyers. The FHSA would be in place as of April 2023 and has certain features.
The FHSA : what does it consist of?
The Tax-Free First Home Savings Account (FHSA) is designed to help first-time buyers save for their down payment. The main idea is to help young people become homeowners through the housing frenzy. The FHSA combines a variety of TFSA (tax-free savings account) and RRSP (registered retirement savings plan) benefits.
In this form of savings, an individual can contribute up to a maximum of $8,000 per year, for a maximum accumulation of $40,000. These contributions are tax-free and the accumulated income is tax-free, so there is nothing to pay back over the years. Withdrawals from the purchase of a property are then also non-taxable.
Its eligibility criteria
In order to access and benefit from the TFSAPP, certain eligibility criteria must be met:
-You must be a Canadian citizen and resident 18 years of age or older.
-There is no maximum age limit for opening an account.
-You must not have acquired a property when opening an account or four years before opening it. It must therefore be a first real estate purchase.
Its characteristics
The FHSA also has certain features:
-The maximum contribution per year is $8,000.
-Unused contributions can be transferred to the following year.
-The maximum FHSA limit is $40,000.
-Like an RRSP, contributions are fully tax deductible. This increases the ability to save.
-Withdrawals related to the purchase of a property are non-taxable.
-These non-taxable withdrawals will be used to purchase a single property for life.
-If a withdrawal is made and has a purpose other than the purchase of real estate, the amount of the withdrawal will then be taxable.
-The HBP (home buyers’ plan) and FHSA can be combined to purchase your first home.
-The money can be invested in a FHSA for up to 15 years or until the age of 71. If this maximum period is reached, the account must be closed and the total amount of the accumulated money transferred to an RRSP.
–If you want to purchase a property with your spouse, you can combine the accumulated amount of your FHSA with another FHSA account for the down payment.
The FHSA then presents certain constraints, but also significant advantages for a first-time buyer.
What types of investments can you hold in a FHSA?
Other products will be offered over time. Here are the ones currently known:
-Stocks, options and bonds
-Savings deposits
-Exchange Traded Funds (ETFs)
-Cash
What are the steps when buying a property?
-Have a written agreement to buy in Canada
-Be considered a first buyer (of a first property)
-Make the withdrawal of the CELIAPP 30 days after the purchase of the property, thus following the passage to the notary
-Closure of FHSA must occur on December 31 of the following year of the first eligible withdrawal
What happens if you don’t buy a property?
After the maximum period of 15 years, you have two options. You can withdraw the full amount accumulated in your FHSA, but it will be taxed. The second option is to transfer FHSA amounts to your RRSP or RRIF (Registered Retirement Income Fund) without tax impact without affecting your RRSP contribution room.
How do I open a FHSA account?
The FHSA account is available in the various banks across the country. It’s a simple process to open an account. Make an appointment with your bank advisor, in person at the branch, by phone or virtually.
Available in 2023, the Tax-Free First Home Savings Account (FHSA) is designed to help first-time buyers through the housing frenzy to save for their down payment. The FHSA has many advantages, such as improved ability to save, with fully tax-deductible contributions and non-taxable withdrawals on the purchase of your first home. In addition, the maximum FHSA limit is raised to $40,000, for a maximum annual contribution of $8,000. The FHSA has many advantages for the purchase of your first property.
Consult other real estate news
![](https://yanicksarrazin.com/wp-content/uploads/2022/08/20-1024x576.png)
The Plateau-Mont-Royal amends its Zoning By-law (01-277).
The Plateau-Mont-Royal amends its Zoning By-law (01-277) In the midst of a housing crisis, the Plateau-Mont-Royal borough in
![](https://yanicksarrazin.com/wp-content/uploads/2022/08/91-1024x576.png)
The FHSA or the Tax-Free First Home Savings Account
The FHSA – Key information Buying a home is an important investment that can lead to one of
![](https://yanicksarrazin.com/wp-content/uploads/2022/08/47-1024x576.png)
Lease renewal : what you need to know
Lease renewal : the important points As the deadline for lease renewal approaches, it is appropriate to point