The First Home Savings Account (FHSA) is a new savings vehicle in Canada designed to help first-time homebuyers save for a home. It combines features of both RRSPs and TFSAs (Tax-Free Savings Accounts).
Tax-Deductible Contributions
Contributions to an FHSA are tax-deductible, similar to an RRSP, reducing taxable income in the year they are made.
Tax-Free Withdrawals
Withdrawals for qualifying home purchases are tax-free, making it easier for first-time buyers to access their savings.
Contribution Limits
There is an annual contribution limit, with a maximum lifetime limit. Unused contribution room can be carried forward.
Eligible Investments
Like an RRSP, funds in an FHSA can be invested in a variety of options, including stocks, bonds, and mutual funds.
Home Purchase Requirement
Funds must be used for the purchase of a qualifying first home within a specific timeframe to retain the tax advantages.
