First Home Savings Account (FHSA)

A First Home Savings Account (FHSA) is a registered account that allows an eligible first-time home buyer to save for a qualifying home purchase.

Contributions to an FHSA are generally tax-deductible, investment growth is tax-free, and a qualifying withdrawal used to purchase a home is not taxable. Other withdrawals are treated as taxable income.

Your FHSA participation room begins only after you open your first FHSA. It is currently $8,000 in the first year, with up to $8,000 of unused participation room carried forward and a lifetime limit of $40,000. These limits apply across all of your FHSAs. Transfers from an RRSP to an FHSA also use participation room but are not deductible.

Before running the TIME MACHINE, you will be asked for the account holder's current FHSA room and any recent FHSA contribution not yet claimed. Use the amount provided by the CRA, adjusted for contributions or transfers made since it was calculated.

An FHSA belongs to one individual and cannot be held jointly. If you have a spouse, select the correct account holder. If you change the holder, the investments in the account will also be reassigned and the affected account priorities will be reviewed.

Select the beneficiary that should be used by the TIME MACHINE when handling the account at the death of the holder. The beneficiary designation held by your financial institution remains the legally relevant designation.

Enter the date on which the FHSA was actually opened. This date determines when FHSA participation room begins and when contributions and withdrawals are allowed in the TIME MACHINE. You may enter a future opening date if you are modelling an FHSA that you plan to open.

An FHSA generally has to be closed within its maximum participation period. The TIME MACHINE uses the opening date to model the 15-year closing limit. If you change the opening date, dates for linked automatic savings or withdrawals may be adjusted so that they fall within the period when the account is open.

The MoneyReady App may warn you if information in REAL ESTATE suggests that you might not have been eligible to open the FHSA. It cannot determine your legal eligibility, so confirm the first-time home buyer conditions with the CRA.

Enter the cumulative amount contributed or transferred into this FHSA toward its lifetime limit. This is not the current account balance. Update it after making a contribution or transfer and review it at least once each year.

The contribution and transfer limits apply to the holder across all of their FHSAs, even when more than one FHSA account has been entered in the MoneyReady App.

To have the TIME MACHINE use the FHSA for a future home purchase, add or edit the future principal residence in REAL ESTATE. The FHSA will be associated with that property, and its projected balance will be used toward the down payment on the purchase date.

If the future property is jointly owned, eligible FHSA accounts belonging to both spouses may be used. An FHSA can be associated with only one future property. If conflicting associations are found, they will be removed and you will be asked to select the intended property again.

The TIME MACHINE will show the amount taken from the FHSA, any estimated mortgage insurance premium, and the remaining amount that must be financed in the warnings for the year of purchase.

At the end of the modelled 15-year period, the TIME MACHINE will transfer the remaining balance to an RRSP or RRIF belonging to the same holder when one is available. Otherwise, it will model the remaining balance as a taxable withdrawal.

The account balance is calculated as the sum of its investments and cannot be edited here. To change the balance, investment growth rates, fees, currencies, or asset allocation, edit the investments held in the account.

The account will be saved, its dates and links will be checked, and you will continue to its investments. Return to this form after making an FHSA contribution or transfer and review it at least once each year.

For current eligibility, contribution and withdrawal rules, see the CRA information about First Home Savings Accounts.