Is the First Home Savings Account the key to getting you into your first home?

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Are you dreaming of owning a home, but feel like it’s out of reach? The First Home Savings Account (FHSA) could be the key to getting you one step closer to realizing your dream. We’ve compiled an FAQ to help you level up your knowledge on everything you need to know about this account.

What is an FHSA? The First Home Savings Account (FHSA) is a tax-free savings account designed to help you save for your first home. The FHSA combines the tax-deductible benefits of an RRSP with the tax-free withdrawals of a TFSA. Contributions to this account can be up to $8,000 per year, for a maximum of $40,000 over 15 years that can be put towards the purchase of a qualifying home.

Am I eligible to open an FHSA? If you are a resident of Canada, at least 18 years of age and are a first-time home buyer, you meet the eligibility criteria. It is important to note that if you are purchasing this home with a spouse or common-law partner, these qualifications apply to them as well.

What can the contributions to my FHSA be used for? Withdrawals can be used toward a down payment, building a new home, purchasing new furniture or sprucing up your new home, as long as the withdrawal is a qualifying withdrawal as defined by CRA.

What if I don’t have extra money to be able to afford to save? Every little bit adds up! You can set up a Pre-Authorized Debit to make saving for your contribution easy and painless. Make smaller regular contributions to your FHSA and before you know it, you will have reached your goal!

What happens if I put money into the account, but don’t buy a home? If you don’t buy a home, any unused savings in your FHSA can be transferred to an RRSP (Registered Retirement Savings Plan) or an RRIF (Registered Retirement Income Fund). It can also be withdrawn as a taxable withdrawal and reported as income.

Does an FHSA account have an expiry date? Yes. The account expires on December 31st of the year in which the earliest of the following occurs:

1. The year after the year you make your first qualifying withdrawal.

2. The 15th anniversary of opening the account.

3. The year you turn 71.

We understand that homeownership may seem out of reach for many, but sometimes the hardest part of saving is getting started. If you dream of one day owning a home, contact your local credit union to help you put a strategy in place to reach your goal.

More information about the First Home Savings account can be found on the CRA’s website.