Last updated: October 10, 2023
To make a tax-free withdrawal (also called a “qualifying withdrawal A qualifying withdrawal from an FHSA means you're making a withdrawal for the purpose of buying a home.”) from your First Home Savings Account (FHSA), you must meet the following conditions:
If you meet the government’s conditions, you can withdraw as much as you’d like from your FHSA on a tax-free basis – either as a single withdrawal or a series of withdrawals . It’s also important to note that you must close your account by the end of the year following the year your first qualifying withdrawal is made. This means that you’ll have to make all your withdrawals within that time period.
For example, if you made your first withdrawal in 2023, then you’ll have to make all your withdrawals and close your FHSA by 2024. However, this isn’t the only factor that can affect you when you have to make withdrawals. Connect with an advisor to discuss your unique situation.
If you can’t meet these conditions, then you can still make “non-qualifying” withdrawals from your FHSA. These are withdrawals that are subject to a withholding tax. They’ll also be included in your taxable income in the year of the withdrawal.
No. Unlike a TFSA, withdrawals from an FHSA don’t reinstate contribution or deduction room the following year.
Yes. However, it wouldn’t be a tax-free qualifying withdrawal. You would include the withdrawal in your income and pay tax at your marginal tax rate. Or, you can transfer unused amounts to your Registered Retirement Savings Plan (RRSP) / Registered Retirement Income Fund (RRIF) on a tax-deferred basis.
Connect with an advisor for more detailed information. You may also want to talk to your tax specialist about any tax implications.
No. However, once you make your first qualifying withdrawal, you must withdraw or transfer to your RRSP or RRIF all remaining funds by December 31 of the following year. To be tax-free, each withdrawal needs to meet the qualifying withdrawal conditions above.
No, you don’t have to repay funds into your FHSA after you make qualifying withdrawals to buy a qualifying home.