What is the First Home Savings Account (FHSA)?
The First Home Savings Account is a type of registered savings plan for Canadians saving to buy their first home. Canadian residents aged 18 years or older can open an FHSA to save towards the purchase of a home in Canada.
There are limits to how much you can put in your FHSA:
$8,000 – yearly contribution limit
$40,000 – lifetime contribution limit
Contribution room carries forward to the next year if you don’t put in the full amount. Carry-forward amounts only start accumulating after you open an FHSA for the first time. The carry-forward room does not automatically start when you turn 18.
The FHSA is designed for first-time home buyers. This means that at the time you withdraw money for a home purchase, you have not resided in a home you owned, in the previous four calendar years.
Other incentive offered for first time home buyers are:
- using RRSP for your first home. 'home buyers plan. Allows a maximum withdraw of $35,000 tax free for the purchase of your first home.
- TFSA: Allows after tax income to be invested tax free.
-First-Time Home Buyers' Tax Credit: $10,000 tax credit can land you at maximum tax rebate of $1500.
- RRSP (HBP), FHSA and First-Time Home Buyers' Tax Credit can be used at the same time for a total of $75,000 (plus accumulated interest from FHSA) tax free income for your first home, plus a tax credit of $10,000.
These savings accounts can really add up to a lot and help you purchase your first home.
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