First Home Savings Account

To be eligible for a First Home Savings Account, you must meet all of the following requirements:

• A Canadian resident
• Age 18-71
• A first-time home buyer

An FHSA can hold the same kinds of investments as an RRSP or a TFSA, including: savings accounts, mutual funds*, term deposits/GIC’s, government and corporate bonds, and publicly traded securities.

*Mutual funds are offered through Credential Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured or guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Their values change frequently and past performance may not be repeated. Credential Asset Management Inc. and Northwest & Ethical Investments L.P. are all wholly owned subsidiaries of Aviso Wealth Inc.

Similar to an RRSP or a TFSA, a first home savings account has both an annual and lifetime contribution limit.

• $8,000 annual contribution limit
• $40,000 lifetime contribution limit
• $8,000 maximum carry forward from unused contribution

The holder of the investment can claim an income-tax deduction for any contributions made to their FHSA in the calendar year or in a previous year, so long as it has not been previously deducted. Please note that you can only hold an FHSA for 15 years.

There are two types of withdrawals from an FHSA – a qualifying withdrawal and transfers.

Qualifying withdrawal:

The investment holder must be a first-time home buyer and a resident of Canada at the time of the withdrawal, and it must be used to buy or build a qualifying home in Canada before October 1 of the year following the year of the withdrawal, accompanied by a written agreement to do so. A qualifying home is defined as a housing unit located in Canada, in which the investment holder will occupy as their primary place of residence within 1 year of buying or building.

Transfers:

Any amount in the FHSA that is not used on a qualifying withdrawal, can be transferred tax-free to an RRSP/RRIF in the investment holder’s name. The transfer must take place by the end of the year following the qualifying withdrawal. Any unused contribution or growth transfers to an RRSP/RRIF are subject to the rules of those accounts (this does not impact RRSP contribution room)

The investment holder can transfer funds from their RRSP or RRIF into an FHSA in their name, tax-free. Any transfer would be subject to the holder’s annual and lifetime FHSA contribution limits. Furthermore, a transfer to an FHSA cannot be deducted from the holder’s income and would not reinstate any RRSP contribution room.

A First Home Savings Account can be used in conjunction with the Home Buyers’ Plan. This means that can maximize your down payment by using the FHSA and your HBP or RRSP HBP for the same qualifying home, allowing up to $75,000 to use towards your first home purchase or up to $150,000 with two qualifying individuals. An HBP allows you to withdrawal from your RRSP tax-free, so long as you put the funds withdrawn back into your RRSP within 15 years.