What Is a First Home Savings Account (FHSA) and How Does It Work for Buying a Home in Ontario?
A First Home Savings Account (FHSA) is an account for first-time buyers that lets you save toward a home, and a qualifying withdrawal is tax-free and does not have to be repaid. To open one, you must be a resident of Canada, at least 18 (19 where that is the age of majority), and 71 or younger on December 31 of the year you open it.
You must also be a first-time home buyer: you have not lived in a qualifying home you owned or jointly owned as your principal residence in the current calendar year or the previous 4 calendar years. If you have a spouse or common-law partner, you also must not have lived in that window in a home they owned or jointly owned as your principal residence.
Participation room is $8,000 in the year you open your first FHSA, and the lifetime limit is $40,000. A withdrawal is tax-free only if you meet every condition, including a written agreement to buy or build and filing Form RC725 with the issuer. If a condition is not met when you withdraw, the amount is taxable.
Key takeaways
- To open an FHSA you must be a Canadian resident, at least 18 (19 where that is the age of majority), and 71 or younger on December 31 of the year you open it.
- You must be a first-time home buyer, and if you have a spouse or common-law partner, a home they owned in the same window can also stop you from qualifying.
- Participation room is $8,000 in the year you open your first FHSA, with a lifetime limit of $40,000.
- A qualifying withdrawal is tax-free only if every condition is met at the time of withdrawal, and otherwise the amount is taxable.