Tax-Free First Home Savings Account<\/p>\n
On August 9, 2022, the Department of Finance released for public comment the draft legislative proposals outlining the First Home Savings Account <\/strong>(\u201cFHSA\u201d). The FHSA was introduced in the 2022 Federal Budget to address the increasing difficulty Canadians are experiencing in buying a first home due to rising real estate values. The FHSA is intended to help Canadians save and fulfill their dreams of home ownership.<\/p>\n An FHSA is a new registered account that will provide the opportunity for Canadians to save up to $40,000 on a tax-free basis to put towards purchasing their first home in Canada. <\/strong>It combines the benefits of tax-deductible contributions as with a Registered Retirement Savings Plan (\u201cRRSP\u201d) and tax-free withdrawals as with a Tax-Free Savings Account (\u201cTFSA\u201d). The draft legislation proposes the FHSA will be available starting on January 1, 2023<\/strong>.<\/p>\n To open an FHSA, an individual must be:<\/p>\n Like the RRSP, contributions to an FHSA are tax deductible, reducing the contributor\u2019s taxable income. An individual:<\/p>\n <\/p>\n Contributions to an FHSA are deductible in the calendar <\/strong>year in which they are made, however contributions can be carried forward and deducted in a future year. As well, unused annual contribution room is carried forward and can be used in a subsequent year.<\/p>\n Other key FHSA contribution details:<\/p>\n Like the TFSA, the FHSA allows the withdrawal of funds on a tax-free basis. To qualify, the following must be true:<\/p>\n Provided the individual meets these conditions, the entire amount of available FHSA funds may be withdrawn tax-free in a single withdrawal or in a series of withdrawals.<\/p>\n If amounts from an FHSA are withdrawn and not used to purchase a qualifying home, the amount of the withdrawal will be included in the income of the individual and taxed at their marginal rates.<\/p>\n An individual is not permitted to make both an FHSA withdrawal and a Home Buyers\u2019 Plan withdrawal in respect of the same qualifying home purchase.<\/p>\n An individual\u2019s FHSA will cease to be an FHSA at the end of the calendar year after the year in which the earliest<\/u> of the following events occurs:<\/p>\n Any savings not used to purchase a qualifying home can be transferred on a tax-free basis into a RRSP\/RRIF or withdrawn on a taxable basis.<\/p>\n Example. <\/strong>A 30-year-old individual opens their first FHSA in 2023 and purchases their first home in 2029. All their FHSAs must be closed by the earlier of:<\/li>\n Tax-Free First Home Savings Account On August 9, 2022, the Department of Finance released for public comment the draft legislative proposals outlining the First Home Savings Account (\u201cFHSA\u201d). The FHSA was introduced in the 2022 Federal Budget to address the increasing difficulty Canadians are experiencing in buying a first home due to rising real estate […]<\/p>\n","protected":false},"author":77,"featured_media":476,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1081","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nWhat is an FHSA?<\/h1>\n
Who can open an FHSA?<\/h1>\n
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Contributions to an FHSA<\/h1>\n
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Withdrawals from an FHSA<\/h1>\n
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Closing or Winding-up an FHSA<\/h1>\n
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