Home » News & Events » Financial Planning » WHAT IS THE TAX-FREE FIRST HOME SAVINGS ACCOUNT?


by | May 11, 2023 | Financial Planning, Tax Planning | 0 comments

The recently introduced First Home Savings Account (FHSA) offers an opportunity to tax-shelter money to be used for a home purchase for eligible participants.

For clients who wish to help their adult children (over age 18) save for a house, gifting money to be contributed to this account has many benefits for your adult child. Contributions create a tax-deduction for the owner of the account (your adult child), which can be deducted when contributed or carried forward to use in future years when income will be higher.

Contributions grow within the account tax-free, and are withdrawn tax-free for the purchase of a home.

The account balance must be used within 15 years of opening the account to purchase a home, however if it is not, it can be added to the account owner’s RRSP, even if they do not have room available.

There is an annual contribution limit of $8,000, and a lifetime limit of $40,000. Unused contribution room can be carried forward for use in future years.

Use of the FHSA does not preclude an individual from also using the Home Buyers Plan (HBP) with their personal RRSP accounts.

If you have any further questions pertaining to these accounts, please reach out to us.