First Home Savings Account (FHSA)

Mark Yestrau, Bridgeport’s Senior VP & Client Portfolio Manager, gives an overview on the Tax-Free First Home Savings Account (FHSA). The FHSA allows Canadian first-time homebuyers between the ages of 18 to 71 to contribute up to $40,000 toward a down payment on their first home. The FHSA is similar to a Registered Retirement Savings Plan (RRSP) in that contributions to the account are tax-deductible and income from investments is received on a tax free-basis. Withdrawals from the account are tax-free if the funds are used to purchase a first home.

Annual contributions of up to $8,000 can be made to an FHSA, subject to a lifetime maximum of $40,000. As the FHSA can stay open for a maximum of 15 years, funds in the account are able to be invested and compound tax-free for an extended period. If a home is not purchased after the 15 year period, the amount in the FHSA can be transferred into an RRSP or RRIF with no tax consequences.