Tax Free First Home Saving Account

With the rising costs of living and housing in Canada, it has become increasingly difficult for younger generations to afford a home.  In order to combat this, the Tax-Free First Home Savings Account (FHSA) was introduced in the 2023 to help Canadian residents to purchase their own home.

To open an FHSA account, an individual must be a resident of Canada, at least 18 years of age, and not have lived in a home that they owned during the calendar year in which the account is opened, or during the preceding 4 years. The annual contribution limit is $8,000 which is tax deductible, up to a lifetime maximum of $40,000.  An individual would be allowed to carry forward unused portions of their annual contribution limit up to a maximum of $8,000. Any income earned in an FHSA is exempt from tax, as withdrawals are made only to purchase a first home.  Furthermore, the undeducted contributions could be carried forward indefinitely and deducted in a later taxation year.

With more good news, the existing Home Buyer’s Tax Credit (HBTC) will be doubled to allow a maximum credit of $1,500 for the purchase of a qualifying home made on or after January 1, 2022, making it just a little bit easier to save and afford a home.

This article is intended for general information purposes only and does not constitute professional advice.  Income tax law and regulation change frequently and the content on this article may no longer reflect the current state of the law. If you have any specific questions, you should consult a professional services advisor or email us for further advice.