First Home Savings Account (FHSA)

Are you dreaming of owning your first home but feeling overwhelmed by the financial aspect? Fear not, because the Canadian government has a solution for you!

Introducing the First Home Savings Account (FHSA), a tax-free investment savings account that helps individuals save and grow their money for the purpose of purchasing their first home.

Starting April 1st 2023, you can contribute up to $8,000 annually to a lifetime limit of $40,000. If you don’t end up using the full annual contribution amount in a calendar year, the unused contribution limit can be used the following year.

And here's the best part: not only is the growth of your funds tax-free, but the contributions you make to the account are also tax-deductible, just like an RRSP. That means contributing to your FHSA can lower your taxable income for the year, keeping more money in your pocket.

But what if you don't end up using all the funds for your first home? No problem! The funds can be transferred from your FHSA into your RRSP. These transfers would not reduce, or be limited by, an individual's available RRSP contribution room. These transfers would not reinstate an individual's FHSA lifetime contribution limit.

This makes the FHSA a versatile and flexible savings option for those looking to invest in their first home.

So, start saving now and make your dream of owning your first home a reality. With the FHSA, you can take a step towards financial security and a bright future.

You can hold the same qualified investments in an FHSA that are currently allowed to be held in a TFSA, including mutual funds, publicly traded securities, government and corporate bonds, and guaranteed investment certificates.

The FHSA was enacted by Bill C-32, which received Royal Assent on December 15, 2022. Individuals can use the FHSA and the Home Buyers’ Plan together when qualifying for a home purchase.

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