New from CRA: First Home Savings Account

The March 2023 Federal Budget brought into force the new First Home Savings Account (FHSA).

There some important differences between this type of account an an RRSP. When using the RRSP Home Buyer Plan, you save tax when you put money into the RRSP but eventually pay tax when you take it out. In contrast, with the new FHSA, no tax is paid when you take it out (to buy your first home).

Here are some of the highlights of the program:

1. $8,000 in annual contributions to a lifetime max of $40,000

2. Co-applicants on a home purchase can each withdraw up to $40,000.

3. Must be between the age of 18 and 71 and resident of Canada.

4. Home buyer has up to 15 years from date of first contribution to use the funds to buy their first home.

5. Must be a first-time home buyer, defined as someone who has not owned a home in which they have lived at any time during the calendar year before the account was opened, or at anytime in the preceding four years.