Qualifying home buyers looking to save for a home will be able to open a FHSA starting April 1, 2023.

The plan, proposed in the 2022 Federal Budget and passed in December 2022, enables home buyers to contribute $8,000 annually to a maximum of $40,000.

A home buyer must:

• be a Canadian resident at least 18 years old; and
• not have lived in a home that they or their spouse/common-law partner owned in the year the account is opened, or the previous four years.

Note: foreign properties where the home buyer lived before moving to Canada are considered for a qualified buyer. 

There’s no minimum amount. Eligible home buyers can contribute $8,000 annually, beginning April 1, 2023 to a maximum of $40,000.

Unused contribution room can be carried forward to future years to a maximum of $8,000.

Example: Sara opens an FHSA account in 2023 and contributes $6,000 of her annual $8,000 limit. In 2024, Sara can contribute $8,000 for the year plus $2,000 carried over from 2023.

Contributions are tax-deductible. Investment income and growth earned inside the FHSA are tax-sheltered.

Only the account holder can contribute to the FHSA. If family members or a spouse want to contribute, they can gift the funds to the account holder who then contributes the funds to the FHSA. 

• The home buyer must have a written agreement to buy or build a qualifying home located in Canada before October 1 of the year following the year of withdrawal.
• The home buyer must also intend to occupy the qualifying home as their principal place of residence within one year of buying or building it.
• All contributions up to a maximum of $40,000 including investment income or growth generated by the funds invested in the FHSA can be withdrawn to buy a qualifying home.
• Where a homebuyer is buying a qualifying home with a spouse/common-law partner, both can use funds from their own FHSA accounts towards the purchase.

A FHSA account can stay open:

• for up to 15 years or until the end of the year when the account holder turns 71 years old; or
• at the end of the year following the year in which a home buyer makes a withdrawal to buy a qualifying home, whichever comes first.

Include:

• a housing unit in Canada (detached, attached, condo); or
• a share in a co-operative housing corporation that provides the buyer with an equity interest in a housing unit in Canada.

The qualifying home must be used as the home buyer’s principal residence.

The FHSA can be used with the federal RRSP Home Buyers’ Plan (HBP).

Initially, the new legislation that created the FHSA prevented home buyers from using both the FHSA and the HBP together to buy the same property.

However, the legislation was changed after lobbying by stakeholders including the Canadian Real Estate Association.

Home buyers can now use both the FHSA and the HBP at the same time to buy a qualifying home.

The HBP allows qualifying Canadians to withdraw up to $35,000 from their RRSP and pay back funds over 15 years. Unlike the HBP, with an FHSA the funds don’t need to be paid back.

Read Canada Revenue Agency’s information about First Home Savings Account.

Read about the design of the First Home Savings Account.

If you have questions about the FHSA or the HBP, please contact Harriet Permut director of government relations at hpermut@rebgv.org.