Last updated: October 10, 2023
Here are 6 benefits to consider if you’re thinking of saving in an FHSA.
Like RRSP contributions, eligible contributions to your FHSA reduce your taxable income for the year of the contribution or a future year.
There is a limit to how much you can contribute into your FHSA annually, and there is a lifetime contribution limit.
Learn more about FHSA contributions
Note on FHSA contribution deadlines: Unlike RRSP contributions, any FHSA contribution you make during the first 60 days of the current year cannot be deducted from your income for the previous year.
Learn more about the difference between FHSAs vs RRSPs
Just like a TFSA, any money you earn in your FHSA is tax-free (provided you use the money to buy a qualifying home).
Also, your FHSA can be used to hold, buy and sell the same types of investments as those allowed in a TFSA like cash, mutual funds, securities listed on a designated stock exchange, guaranteed investment certificates, and more.
Unlike the Home Buyers’ Plan (HBP), you don’t need to pay anything back if you use all the savings from your FHSA to buy a qualifying home.
Since each FHSA is an individual account, your spouse or common-law partner can also open and contribute to their own FHSA. Both accounts can be used to help with your down payment, so long as you’re both first-time homebuyers.
You might have already started saving some money in your RRSP, intending to use the HBP to buy your first home. You can use both an FHSA and the HBP to buy the same qualifying home.
If you decide to use the money in your FHSA for something other than buying a home, you can transfer the money to an RRSP or RRIF without any immediate tax consequences, as long as it is a direct transfer A direct transfer is a transfer completed between the financial institutions of the two plans or accounts involved., and other conditions are met.
Connect with an advisor for more detailed information. You may also want to talk to your tax specialist about any tax implications.