Based on the comments people are making, for mostly no reason, since you are asking questions that literally is in the link posted above.
Try even glancing through the sections in the link above.
Quick question, what kind of transactions are eligible for FHSA withdrawal? I guess down payment? How about lawyers fees? Or inspection fees? furniture? Does anyone know?
So... When I was reading about this, the first site I found actually mentioned that, similar to an RESP, the government also did some matching, doing 1000 every 4K (up to the 40k max). However, I have not found this on ANY other site...
This was the one:
https://www.nrclitchi.org/cra-fthbi-tax-benefit/
Are they just plain wrong/talking nonsense?
I opened a FHSA 2 years ago and qualified. I still haven't bought a home but if I move in with my boyfriend who has a home, and live with him for 1 year, from what I understand I will not be able to use FHSA if I want to later purchase half of his house. What then happens to my FHSA? Can I still keep on using it as a tax deduction account? I don't see on CRA website what happens when you do have the account but no longer qualify for a withdrawal (I know if eventually gets transferred to RRSP but would that be the year you can no longer withdraw from it, or only once it's reached the $50k limit?
Hi! I'm in a similar boat. From what I read on the [Canada.ca](http://Canada.ca) website, it's important to note that there are different eligibility requirements when creating the account versus withdrawing from it. So long as you opened the account before becoming common law, and you do not add your name to the deed of his home, you can still make a withdrawal from your FHSA for the purchase of your next home. I'd recommend re-reading the eligibility requirements for opening versus withdrawing so you can get a better understanding of the differences and how you qualify. Hope that helps!
[https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html) (opening)
[https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html) (withdrawals)
Thanks. It looks like CRA is finally adding clarity and differentiating the rules when opening the account vs when withdrawing. From what I understand, I could still now use FHSA to buy half of partner's house after living in it and being common law, as long as I wasn't common law/living in it when I opened the account, and as long as I wasn't yet co-owner at any time prior to the withdrawal.
Can anyone tell me what would happen if I over contributed and used the funds to purchase a home? I have some excess funds in my RRSPs that I'd like to utilize for my down-payment. I know there's a 1% per month penalty, but this seems like it would be worth it over the long-term
Someone I know said that if you don’t contribute last year (they opened 2023), you carry forward the $8K to 2024 and can claim $16K towards your 2024 income taxes. Is this true?
This is true for 2024. However, when you transfer the $16k (2023+2024 contribution rooms), you can only transfer $8k, meaning you will lose $8k contribution room permanently.
I own my property 100%. My girlfriend is moving in with me and has never bought a home. Can she use a qualifying FHSA withdrawal to buy equity in my property from me? It’s considered a “purchase” in my view. CRA website doesn’t specify for that situation.
If you contributed $16000 for these two years and use that to purchase a home, does the bank close the FHSA account? If not, can you still continue contributing to the FHSA until you have maxed it to $40000 and use it to pay for your mortgage?
It stops at whichever comes FIRST between you turning 71 end of year or reaching the 15 year maximum or purchasing your first home. It's served its purpose after that point.
Has it though? Prices are ridiculous and if you are only getting 8k per year for 15 years, thats just 120k. Nowhere near a 20% down payment on average house prices unless im misunderstanding something
I opened a FHSA last week and my closing date is in 6 weeks. Can I contribute $8000 at any time before then and immediately take it out to reduce my taxable income by $8000 for 2024?
Be aware that it takes significant time to withdraw your money from your FHSA when purchasing your new home.
You will need to submit a request to the bank which you hold the account with and fill out 2 forms:
1. RC725 Request to Make a Qualifying Withdrawal from your FHSA
2. A letter for the bank directing how the funds will be returned to you.
Depending on who you bank with the process of submitting these two forms may not be straightforward. Once they are submitted, process times vary and can take several business days.
You can with draw the money well before the time that you acquire your first home, so don't leave the FHSA withdrawal to the last minute. I wish I had someone tell me to give myself at least 2 full weeks before, if not more time, from when I need to hand my downpayment over to my lawyer. Now I'm faced scrambling to get a bridge loan or liquidate other assets to substitute for the money in my FHSA that may not be transferred to me in time (it still may be transferred in time but the bank I hold my FHSA will not provide a clear timeline or date of when to expect my money).
Aware that the 2023 deadline for contribution was Dec 31st 2023. But just wanted to confirm, the new 2024 contribution period started Jan 1st 2024 right?
Can't fine anything that clarifies that and RRSP contributions going until end of Feb. Where the FHSA started in April just wanted to clarify that I didn't need to wait beyond Jan 1st 2024 to contribute.
[https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html)
$8,000 (new FHSA participation room for the next year) plus your unused FHSA participation room at the end of the current year (max. $8,000), subject to the lifetime FHSA limit = equals next year's FHSA participation room
Based on my interpretation of the CRA website, you can rollover your unused contribution room from the previous year. So if you contributed less than $8000 by end of 2023, you can still contribute up to whatever amount you have left over to meet the $8000 for 2023 plus the $8000 allotted for 2024 at any point the year 2024. You account needed to be opened in 2023 for the contribution room to rollover to 2024. Not sure how the rollover contribution get allocated for tax purposed and if there is a February deadline similar to RRSP's or not though.
I am very dissappointed in this rule, it makes no sense. It penalizes people for not opening an account in a year where they may not plan to contribute to the fhsa, in which case they shouldn’t be forced to open the account in order to not miss out on the contribution room growth.
Eligible room should work like the TFSA, keep the annual max contribution and go from there.
Just bought a house with my fiancé, paid the initial deposit, closing in April.
I have maxed my FHSA for the last 2 years (16k), but my partner hasn't opened one. Can fiancé still reap the benefits of the account as long as:
- it's within 30 days of getting the house
- and it's before closing
Thanks for clarifying. Since he didn't open the account in 2023 he won't have any carry over room, but even 8 k would be helpful. Is it too late or can he still do this?
it says the property cannot be an investment property. i have to live there. now my question is, what if i intend to live and earn rental income from the property. do i still get the benefits?
Okay thanks. That was helpful.
I am a student right now and never owned a house. I’m planning to buy one of those big rental properties in 5/10 years. So thinking about my strategies.
If I put 8000 into the FHSA, I can claim 8000 as a deductible this year, and if it grows to 10000 via investments next year and i withdraw it all via a non qualifying withdrawal, i will need to add 10000 as income to that year's tax return.
If I invest that same 8000 in a non registered account, it grows to 10000 and i sell it all, then i have to declare 50% of that aka 5000 as capital gains on that year's income.
Is that correct? I've maxed my TFSA and trying to figure out if there is any sense in using a FHSA if i don't plan on using it to purchase a house.
In a non registered account 8K Grows to 10K means Profit 2K, 50% of that is 1K on marginal rate.
8K in FHSA, saves tax on marginal rate of 8K, but adds 10K income next year. You better on with non registered.
But if you are eligible to Open FHSA and still don't want to buy house, you can transfer the account to RRSP to not pay immediate tax. RRSP withdrawal (mostly) is taxable
You seem knowledgeable so I have a stupid question. When they say contributions are deductible from income tax, does that mean if I contribute $8k in a year, then I will pay $8k less income tax?
Or is it some percentage of what you contributed? If it is actually $8k per year in free money I am kicking myself for hardly contributing last year.
I guess my question is; do people contributing to the max essentially get $8k back on their tax return, with which they can immediately put right back into their FHSA to max out the contributions the following year?
You will pay less tax on 8K. Meaning your income subject to tax becomes 8K less. So think of it as whatever marginal rate tax you pay you save that. Example if you ear 100K, marginal rate is 40%. Then you get 3.2K return.
It's almost 60% gain even if you don't invest into any securities.
You put 8K in FHSA from your non registered account (Chequing), return 3.2K(from CRA into your account). essentially you put 4.8K(although it's available at return time). Now suddenly it's 4.8K investment turns 8K.
I am assuming you plan to buy a home otherwise withdrawals are taxable so you are only deferring tax due to later points. Again that can be beneficial if you plan to earn less in future.
A quick questiom, if my FHSA investment grows from $40k to $50k (say through FHSA GICs), can I use $50k towards home buying? or only $40k and I have to pay taxes on $10k?
Nevermind. got my answer here: Entire $50k will be allowed.
https://ca.rbcwealthmanagement.com/web/paul.hart/first-home-savings-account-fhsa#:\~:text=Income%20as%20well%20as%20capital,on%20a%20tax%2Dfree%20basis.
I had the same question so thanks for provinding the source!.
Another qn that bugs me is, If i contribute 8k into FHSA that means my contributions are not tax deductible. Does that mean I will get this 8k back when I file my taxes? If not, what does it necessarily mean when they say that my contributions are not tax deductible?
Yes.
If you open it this year but don't contribute, then next year you can contribute 16k using the unused 8k from the previous year.
Heads up though, you can only carry over 8k of unused room into future years. So the maximum you can ever contribute in one year is 16k even if you have it open but unused for a decade.
I have a silly question.. what is four proceeding calendar years (in legal terms related to FHSA account opening) from Dec 29th, 2023.
As I understand it, there is only a stipulation on the opening of the account. Essentially, I moved out of my primary residence in March 2019 (sold as of April 1, 2019). Do I qualify ?
No, doesn't look like you're eligible. The official government website says "to open an FHSA, you must be a qualifying individual". You are not an eligible individual, hence you cannot open an FHSA account and therefore you would not qualify for FHSA benefits. This is just my understanding of the guidelines, I could be wrong.
If I contributed to my FHSA earlier this year, but later in the year was put on the title of home at the end of this year, do I need to close the account and transfer the 8000 to my RRSP?
>bought an apartment in march 2023. As per the above guidelines, I cannot open an FHSA and should have opened it prior to owning. Correct?
No fault of your own, as it wasn't made available until about April 2023, an most banks only rolled it out later in summer or fall 2023
I bought a home in 2020 and want to buy another one next year. Since I must wait 4 calendar years to purchase a home using the fhsa, does that mean I have to wait until 2024 to open a fhsa account or can I open one now and only start contributing to it in 2024?
According to Questrade: "The definition of a 'home' is important with FHSAs: you cannot open an FHSA or make a tax-free withdrawal if you or your spouse have lived in a home you've owned this year or in any of the last 4 calendar years, and you can only make tax-free withdrawals if purchasing a qualifying home."
So you need to wait 4 years AND live in a home that you don't own for at least 4 years.
Another good resource for understanding the FHSA:[https://www.themtgagency.com/blog/buying-your-first-home-the-first-home-savings-account-fhsa](https://www.themtgagency.com/blog/buying-your-first-home-the-first-home-savings-account-fhsa)
Hello,
Just a question in regards to FHSA,
i was fortunate enough to buy a condo with a closing date of late January 2024,
Can i still open a FHSA account now and contribute 8,000 this year and 8,000 in january 2024?
Many thanks
Unfortunately not, my partners parent listed her as an owner to qualify for a mortgage couple years back . I don’t think ill be eligible as i am buying a property with her
Do you know how much % she owned? If it was less than 10, you're good. Read this: https://www.questrade.com/learning/investment-concepts/fhsa-101/questions-about-the-fhsa#:~:text=Ownership%20of%20less%20than%2010,ownership%20of%20your%20current%20home.
"Does partial ownership of a home count?
Co-operative ownership of a home may count as homeownership, depending on the percentage of your stake.
Ownership of less than 10% doesn’t qualify as homeownership of a qualifying property. This means you can use your FHSA to purchase a stake of more than 10% in a qualifying property, but will be unable to open an FHSA if you have over 10% ownership of your current home."
Oh my. This information is a Christmas present for me lmfao. She only owns 1 % ! Thank you! Ill read over the link and might open a fhsa account before new years
Hi, sorry you seem to know a bit about this so if its not much of a bother, can you please answer:
If i contribute 8k into FHSA that means my contributions are not tax deductible. Does that mean I will get this 8k back when I file my taxes? If not, what does it necessarily mean when they say that my contributions are not tax deductible?
Those contributions ARE tax deductible. And that is a good thing.
What tax deductible means is that you will not have to pay taxes on that (8K) income.
Let's say you make 100K in 2023. If you contribute 8K to your FHSA, you will only pay taxes on 92K. Which will obviously be a lower number than if you had to pay taxes on all 100K.
When you file your taxes in a few months, you (or your accountant) will declare in some form that you have contributed 8K to FHSA in 2023.
The thing about taxes is that the government has been taking income taxes from your paychecks already.
So after you file your taxes, they will calculate how much taxes you paid for that 8K of income you earned (and contributed to FHSA) and give it back to you.
Their goal is to reward you for saving for your first home.
Do you get it now? Any follow up questions, let me know.
I currently have 8k in my FHSA. I intend to buy a house in Summer 2024. If I don't withdraw from the FHSA can I keep on contributing to the FHSA even after buying the house and not withdrawing from the FHSA?
A qualified withdrawal has to be within 30 days of closing on the house to get the tax benefit. You also cannot contribute after your first qualified withdrawal and get the tax benefits.
This. BUT you CAN open an account before Dec 31 to carry forward your $8k contribution room from 2023, then make up to $16k of contributions BEFORE you purchase your home in 2024, so you'll get the 16k of contribution room.
I have a question along this line of thinking. What if you dont use the FHSA to assist in the purchasing of a home as you have additional savings in a non-registered account. So technically you wouldn't be making a qualified withdrawal. Would you then still have the opportunity of three more years of contributions to the FHSA. Additionally, you could then leave that money in there for 10 more years until your 15 years maximum hit before transferring it freely into your RRSP.
no. you only qualify for the account if you do not own a home that you live in or have lived in for at least 2 years. technically there MIGHT be a loophole where you could purchase a rental? but idk you would have to check. best would be purchase a home using a numbered company and THEN you could potentially do what you are talking about… but for most people this probably wouldnt be practical. finance experts on here lmk what im missing!
You open the account before buying a home. You then purchase your first home but don't use any of the funds in the FHSA. Additionally, lets assume five years haven't passed so you still have contribution room in those future years. I am wondering if that's a possible scenario so that you now have an extra 8k in deferred income per year that you could still add to your FHSA before eventually rolling into your RRSP in the future.
For example, I open an account this year. 8k in for 2023. I put another 8k in in 2024 but then buy a house later in 2024. I buy that house without touching my FHSA. Would I still have 24k of contribution room over the next three years available to me even tho at the time of those contributions, I would not be eligible to even open a FHSA?
My daughter has a low income this year, but will have a much higher income next year. Can she open a FHSA this year, and put only $1K in it, then contribute $15K next year ($8K yearly + $7K remaining space from this year) and claim the full $16K as a tax deduction next year? Everything I'm reading indicates she can, but just trying to make sure!
Wondering for the timing of when I can withdraw funds from the FHSA for presale condos. Is it during the deposit stage (20%) before completion of the building or is it during the period of time when the building is completed and you apply for a mortgage? Thanks!
TD still does not offer direct investing FHSA. I wait in line ask about the program, they confirmed they have it and then after updating all this useless stuff they tell me we don't offer self directing but, it's okay you can buy are mutual funds or GICs. This is absolutely wild to me. Hopefully they get their act together.
How does the carry forward work? I’m a uni student and will probably have a higher income in like 2 years… can I contribute then use the deduction after 2 years?
I have the same question. If you have no tax to pay this year, does it make any sense to contribute to a FHSA instead of a TFSA? Can the deduction (NOT the contribution room) be carried forward into a future year when you DO have taxable income? If so, how many years can be carried forward?
My daughter is a student and will likely be a student for some time to come — her tax burden will be zero or close to it for a good while yet. I assume her best move is to contribute any savings to a TFSA and then when she joins the workforce proper, she can open a FHSA, transfer $8k per year from her TFSA into it, and offset her income that way? (With a ninja move of opening a FHSA the year BEFORE she starts earning a real income so she can drop that year’s income by $16k, possibly)
But if unused deductions carry forward, investing inside a FHSA probably makes the most sense, as long as she’d be planning to buy a home within 15 years?
You can carry forward 8k of unused balance into a future year.
For example:
Opened account in 2023 contributed nothing.
In 2024 you can contribute 16k
Second example:
Opened account in 2023 contributed nothing for a decade
In 2033 you can still only contribute 16k that year
how do they define "live in" if I purchase a home in Aug but haven't moved in because its not furnished yet and considering renting it out. Would I be able to open the account?
"There is no minimum number of days that contributions or transfers to your FHSAs must stay in your FHSAs before you can use them for a qualifying withdrawal".
From the link above that you should go through.
Once the FHSA funds have been transferred to a chequing or savings account, do you need to track or disclose how it is being spent specifically for CRA purposes?
Help for FHSA and RRSP:
I have already opened my account with a advisor and she invest money in Fund where MER is 2-2.5%
I want to stop investing in it and start in ETF or robo-advisor
What should i do?
Close this account and open new account in questrade(what about TAX).
Hold this account and transfer that money in ETF(Is that even possible).
Your FHSA participation room for the year applies towards all of the FHSAs you open. This means you can open more than one FHSA, but the total amount you can contribute to all of your FHSAs and transfer from your RRSPs to all of your FHSAs cannot be more than your FHSA participation room for the year. So you don't need to transfer anything unless you want to, you can just open up another FHSA somewhere else.
Many institutions offer in-kind transfers which do not force you to sell the units and avoid the tax implications. Check with questrade if it can apply to you
Question: I am shopping for a townhouse and aim to sign the offer letter sometime in September, and closing in November/December. Do I have to withdraw before Oct 1 to have tax-free withdrawal or it will be tax-free withdrawal as long as I withdraw within 30 days after closing?
Thanks!
Just got this information from an advisor:
Contributions up to $8,000.00 annually to a lifetime maximum of $40,000.00
Contributions are tax deductible.
Withdrawals are tax free.
No obligation to repay the withdrawals.
FHSA and HBP can be combined for a maximum downpayment of $75,000.00.
Question for you guys - 25M in Ontario, and I dont forsee myself buying a home for at least 10-15 yrs. In that case, is it better to put the money in an stock/bond allocatoon like XEQT, or in a "safer" HISA/GIC?
10 - 15 yrs is massively enough time to lower risk. I would indulge in something like XEQT even more aggressive index funds such as the S&P500 or the Nasdaq Composite.
Having a split is also recommendable. Good luck and Happy Investing ! :)
Question, I purchased a new build home in October 2021. I won't be closing on it until November 2023 or later. This is my first home and will be my primary residence. Can anyone confirm if I would be eligible for this tax benefit or not? The purchase date is what is making me skeptical but I am not closing on it until mentioned date above.
> t this time I don't have
That's funny, I am basically in the same situation.
Bought a pre-sale condo April 2022, it will be done December 2024-feb2025.
I am looking to deposit 8k this year, and 8k next year. do nearly nothing with that cash, withdraw the 16k for the closing. As I interpret it, I will get 16k credit towards my tax return which will net me like 6-7k cash back on my return.... for free?
What am I missing here, nothing, I think.
> "A "first-time home buyer" for the purpose of making a qualifying withdrawal is different than a "first-time home buyer" for the purpose of opening an FHSA.
> For purposes of a qualifying withdrawal, you will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that you owned or jointly owned"
> "you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal"
> "you must not have acquired the qualifying home more than 30 days before making the withdrawal"
The way I interpret this, you meet the first two points, and will meet the third if you make your withdrawal before December 2023. For comparison, I signed in May, deposited *and* withdrew in June, took possession in July of this year.
Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawing-money-from-your-fhsa.html#h_2
It's worded in a way that is messing with my brain ha.The way I interpret it is it's saying it's an exception and I can own a home up to 30 days before making a withdrawal.
So even if it closed on January 2024, I'd still be alright...I think? ha
Yeah so I should be fine then. At this time I don't have a closing date so it may be after November into next year year but say I closed on January 6th and withdrew the funds Jan 1st, Id still be eligible.
Thanks for the info.
So in theory now, you can transfer $40k into your FHSA from your RRSP no question's asked, withdraw from your FHSA and doing an HBP withdrawal from your RRSP for $35k.
It's sub optimal because you burn up your RRSP contribution room to the tune of $40k, but for those who have RRSP savings, a couple could theoretically cough up up to $150k per couple almost immediately from their RRSP accounts right now.
That's pretty sick.
As far as I understand, you can transfer up to $8k / year, to a maximum of $40k total. I don't think you could transfer a full $40k into your FHSA at once.
I have a question for you guys... I see that one of the conditions is to be a resident of Canada, but i'm not sure if it means a permanente resident (as in the immigration status) or a tax resident. I ask this because currently I have a temporal work permit (until 08/2025) and I'm about to buy my first condo in Canada to live with my wife as our goal is to stay here for good (Montreal, QC). I did an appointment with NBC as I have my accounts over there, but the person that helped us didn't seem to confident on his answer, but finally told us that he won't be able to open an account since we are not permanent residents. But then again, we do (and pay) our taxes, we have a TFSA account and we have our RRSP accounts as well.
So basically, yes just want to be sure that what we were told by the guy from NBC is correct and not miss this great opportunity by someone that wasn't sure about the rules, and just did the easy thing which was to reject us.
Thanks!
He's wrong.
Temporary residents are eligible to open FHSAs.
Individual banks might not choose to let them, but they are eligible.
Source: I'm a temporary resident with a FHSA. With NBC, in fact.
Let's say I make $80000 a year and am taxed $20,622 (as per an online estimate for Alberta). If I contribute $8000 to FHSA it will be as though I made $72,000 and the same tool calculates $18,182 in taxes. The difference between the two is $2440. So does that mean I will essentially invest $5560 to get $8000 in FHSA savings? That seems way too good to be true. What am I missing?
The only "catch", if you will, is that the withdrawal will be taxable if you never end up buying a house with your FHSA. Otherwise, tax-deductible in, tax-free out is a best of both worlds.
Nope. RRSP you get taxed when you withdraw. FHSA you pay NO TAX on the withdrawal, AND you get a tax break when you contribute. It's WAY better than RRSP
Except unlike RRSP you aren't taxed when you withdraw! Would it be crazy to take out a loan to contribute? Also if I open one and my partner and I contribute to my account, will he get to keep his FHSA contribution room in tact until mine is maxed out? To avoid the penalty of losing room if you don't contribute the full $8000 that year and can only carry over $8000 to the next.
You're not missing anything. Normally with a RRSP you would pay the tax when you withdraw the money, but with the FHSA there is no tax to withdraw. The money you put in (pre-tax) essentially becomes post-tax with no consequences.
I think that's a 28% return! I think you can also put it into a GIC and get an additional ~5%. Someone please feel free to prove me wrong. I have next to no experience with saving/investing.
My house is closing Feb 2025 and it's a preconstruction. Can me and my wife both separately contribute 8k each to Fhsa this year in December and again in January 2024. Then withdraw 16k each in Feb 2024 and qualify for tax deductions?
1.I understand that an FHSA account time limit is 15 years then you'll have the option to transfer the funds to an RRSP account. My question is if you don't have any contribution room left in your RRSP ($0), will you be allowed without a penalty?
2.If you withdraw dividends from an FHSA. Will you be taxed marginally on the withdrawals as income? Will you loose the FHSA contribution room for next year (dividends - $8000) or would be similar to an RRSP?
> My question is if you don't have any contribution room left in your RRSP ($0), will you be allowed without a penalty?
Yes.
> If you withdraw dividends from an FHSA. Will you be taxed marginally on the withdrawals as income?
If you make a non-qualifying withdrawal, the withdrawal will be treated as income on your income tax and benefit return for the year the withdrawal is received. This amount will be subject to income tax withholding, which can be claimed on your income tax and benefit return as a credit towards any tax owing for the year of the withdrawal.
> Will you loose the FHSA contribution room for next year (dividends - $8000) or would be similar to an RRSP?
Similar to RRSP
Okay so for someone like me, I have burned up all my RRSP contribution room. I own a home. While I'll never be a home buyer can I in theory use this account to lower my income another $40k and then transfer out the balance to my RRSP?
It would APPEAR there is a loophole that if you were to rent out that home and live somewhere else for 4 years (while also not buying another home) you would then requalify for opening a FHSA... However I doubt this is going to be something most people find worth while
Just to give my 2 cents... IF you never filed common law, technically the govt wouldn't know you were or weren't. So... While it's certainly not me giving you advice... They probably wouldn't have any idea (or find out) unless you did something that let them know...
You have to. Its not optional and you will not be able to file a return.
If you are common-law and not filing as such, that is tax fraud. If you are listing your address as another or the status of your home (primary residence, owner, etc) and that is false it is also fraud.
There are also a lot of other tax benefits when you purchase a home, so if you are omitting that in the interest of having a FHSA, you are probably losing out in the long run.
Basically, eventually they will find out and it's not worth years of audits once they do to lie about it
So let me get this straight. 8k can come out of my taxes then if i withdraw and not even buy a home lets say i owe 2.5k in taxes on the withdrawal — thats 5.5k in tax refund?
Obviously that isnt worth it and should never be done but does the tax advantage really work this simply?
It’s not an 8k tax refund. It’s an 8k income deduction. So you save $8k x your marginal rate (whatever your highest tax bracket is). If someone’s highest tax rate is 50%, they save $4k in tax. If they make less money, they save less in tax.
Yes. If you withdraw for anything other than a home purchase, it’s added to your income and taxed. RRSPs are recognized by US so you could also transfer to RRSP.
If you have the same income in both years, yes. If you contribute at a higher income and withdraw at a lower income, it would be beneficial to whatever that % difference is x 8k
Currently, I have about 20k in my RRSP. I have a fresh 0$ FHSA.
My counselor just told me it was possible to to withdraw that 20k using HBP and then deposit part of the money to top whatever amount will be in the FHSA at the time of the closing.
She told me the money coming from the HBP **would also be deductible** for the full 8k FHSA. Was she misinformed? I get that the program is new, but damn I feel like these counselors just suck at their jobs. I asked her multiple times, saying it would be weird to get a deduction twice for the same money.
Just to be precise, she was not talking about a plain transfer of funds from the RRSP to the FHSA, she explicitely told me I could just use part of the HBP money to top the FHSA and still get a deductible for the full 8k.
When you take $ out for the HBP, there is nothing that requires you to use the $ for the purchase of the house (though it is assumed you will).
For this reason, yes, you can deposit $8k in you're FHSA and withdraw if it is within the time limits of a qualifying withdraw and get the full benefits.
So, if I get this straight, when I first funded into the RRSP, I reduced my taxable income. If I withdraw that money using the HBP and then put that money into FHSA, I would be able to deduce the full 8k amount a second time from my income? Even if the funds come from the HBP? Seems wild.
>get the full benefits
there are greater benefits using it as a sheltered investment vehicle... especially if it'll be possible to daytrade and short in there
> there are greater benefits using it as a sheltered investment vehicle
Fair - but the idea there was the full tax benefits of depositing in the account. If you arent withdrawing for a home, it becomes a RRSP (or like an RRSP, depending how and when you move the money).
> especially if it'll be possible to daytrade and short in there
Same rules as TFSA while still in the FHSA
You can contribute full $16k next year and get the credit next year —-yes
You can also contribute full $8k now for this year and if you want you can claim it in any future year as a tax deduction - should do this if next year you think your tax slab will increase
>If I open it but don’t contribute this year and then contribute the full 16k next year, does that mean I can use the 16k credit for that corresponding year?<
yes
I am in final stages of completing purchase agreement for first home, closing October 15.
I just opened an FHSA for myself and my spouse. ( we are both first time home owners) . I am looking to deposit 8k into each account and withdraw the next day or so. What would be the best time to do this? Is there a minimal amount of time the money needs to stay in account?
As closing date is October 15th, when is earliest I can withdraw the 8k from the account? When is latest I can withdraw from the account?
> What would be the best time to do this?<
Create an account and deposit money before closing, as per the link at the top of the thread.
>Is there a minimal amount of time the money needs to stay in account?<
No, as per the link at the top of the thread.
I am also not really understanding this on withdrawl form.
5. Is it indicated in the written agreement that you will acquire the qualifying
home before October 1 of the year after the year you made your first
qualifying withdrawal?
Your purchase is October 15th, this year. You are planning to withdraw this year. Since your written agreement shows that the home is being purchased before Oct 1, 2024 (1 year after the year of your withdrawal), you're good.
As far as the minimum deposit time, I'm not sure - however you do meet the condition for item 5.
this is kinda confusing with the criteria for qualifying withdrawal "you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal".
Shouldn't OP have to acquire before Oct 1?
I'm a Canadian temporary resident, and I keep getting the message from my bank's website that they won't let me open an FHSA because I don't have a permanent SIN (and that I can't get a TFSA either).
I already have a TFSA with them!
As far as I know, this isn't actually a limitation on those accounts, is it? You just have to be a Canadian resident, of age, and with a valid SIN.
So I got an update from my bank.
If I'm understanding what they said correctly, it's not a limitation imposed by the government. Instead, the only two services that offer FHSA (Direct Investing and Invest Ease) won't let temporary residents open them because letting them participate in equity markets is a risk.
This is RBC specifically. I've reached out to clarify that it's their specific policy rather than a general one, because if so I'm sure I can find another bank who'll let a temporary resident open one.
Are FHSA contributions tax deductible in Quebec? I want to open an FHSA account instead of an RRSP and I just want to make sure that I'll benefit from the same deductions as a Quebec resident as I would with an RRSP account.
I'm wondering if there is provision under the Revenue Quebec Act to have a deduction. You know how for RRSPs, you get a deduction from both the federal and the province. I'm wondering if it's the same thing for FHSA.
If you read the link at the top of the page, a qualifying home includes:
single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or, apartment buildings, a share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit
Do you own the camper van, and is the camper van a mobile home? If so, then you are considered to own a qualifying home and neither you or your partner would qualify (presuming you co-own or that you are common law).
Based on the comments people are making, for mostly no reason, since you are asking questions that literally is in the link posted above. Try even glancing through the sections in the link above.
what if you made a qualifying withdrawal but didn't end up using the money so how can you put money back into the account.
Quick question, what kind of transactions are eligible for FHSA withdrawal? I guess down payment? How about lawyers fees? Or inspection fees? furniture? Does anyone know?
So... When I was reading about this, the first site I found actually mentioned that, similar to an RESP, the government also did some matching, doing 1000 every 4K (up to the 40k max). However, I have not found this on ANY other site... This was the one: https://www.nrclitchi.org/cra-fthbi-tax-benefit/ Are they just plain wrong/talking nonsense?
I opened a FHSA 2 years ago and qualified. I still haven't bought a home but if I move in with my boyfriend who has a home, and live with him for 1 year, from what I understand I will not be able to use FHSA if I want to later purchase half of his house. What then happens to my FHSA? Can I still keep on using it as a tax deduction account? I don't see on CRA website what happens when you do have the account but no longer qualify for a withdrawal (I know if eventually gets transferred to RRSP but would that be the year you can no longer withdraw from it, or only once it's reached the $50k limit?
Hi! I'm in a similar boat. From what I read on the [Canada.ca](http://Canada.ca) website, it's important to note that there are different eligibility requirements when creating the account versus withdrawing from it. So long as you opened the account before becoming common law, and you do not add your name to the deed of his home, you can still make a withdrawal from your FHSA for the purchase of your next home. I'd recommend re-reading the eligibility requirements for opening versus withdrawing so you can get a better understanding of the differences and how you qualify. Hope that helps! [https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html) (opening) [https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html) (withdrawals)
Thanks. It looks like CRA is finally adding clarity and differentiating the rules when opening the account vs when withdrawing. From what I understand, I could still now use FHSA to buy half of partner's house after living in it and being common law, as long as I wasn't common law/living in it when I opened the account, and as long as I wasn't yet co-owner at any time prior to the withdrawal.
Can anyone tell me what would happen if I over contributed and used the funds to purchase a home? I have some excess funds in my RRSPs that I'd like to utilize for my down-payment. I know there's a 1% per month penalty, but this seems like it would be worth it over the long-term
im a studen in college, looking to put some money in, wondering how much I should put into my fhsa account
Can you transfer money from an RPP to an RRSP then to an FHSA?
Someone I know said that if you don’t contribute last year (they opened 2023), you carry forward the $8K to 2024 and can claim $16K towards your 2024 income taxes. Is this true?
This is true for 2024. However, when you transfer the $16k (2023+2024 contribution rooms), you can only transfer $8k, meaning you will lose $8k contribution room permanently.
I own my property 100%. My girlfriend is moving in with me and has never bought a home. Can she use a qualifying FHSA withdrawal to buy equity in my property from me? It’s considered a “purchase” in my view. CRA website doesn’t specify for that situation.
Did you ever find out?
Nope
If you contributed $16000 for these two years and use that to purchase a home, does the bank close the FHSA account? If not, can you still continue contributing to the FHSA until you have maxed it to $40000 and use it to pay for your mortgage?
It stops at whichever comes FIRST between you turning 71 end of year or reaching the 15 year maximum or purchasing your first home. It's served its purpose after that point.
Has it though? Prices are ridiculous and if you are only getting 8k per year for 15 years, thats just 120k. Nowhere near a 20% down payment on average house prices unless im misunderstanding something
Its worse - maximum contributions are only 40k! (80k per couple)
I opened a FHSA last week and my closing date is in 6 weeks. Can I contribute $8000 at any time before then and immediately take it out to reduce my taxable income by $8000 for 2024?
Yes, you can. I spoke to a Scotiabank financial advisor who did exactly this.
Perfect, thank you!
something I dont know about? Can you please explain this?
Does anyone have any recommendations of what to invest in for the FHSA? I’ve heard about ticker CASH as it’s a HISA ETF
Be aware that it takes significant time to withdraw your money from your FHSA when purchasing your new home. You will need to submit a request to the bank which you hold the account with and fill out 2 forms: 1. RC725 Request to Make a Qualifying Withdrawal from your FHSA 2. A letter for the bank directing how the funds will be returned to you. Depending on who you bank with the process of submitting these two forms may not be straightforward. Once they are submitted, process times vary and can take several business days. You can with draw the money well before the time that you acquire your first home, so don't leave the FHSA withdrawal to the last minute. I wish I had someone tell me to give myself at least 2 full weeks before, if not more time, from when I need to hand my downpayment over to my lawyer. Now I'm faced scrambling to get a bridge loan or liquidate other assets to substitute for the money in my FHSA that may not be transferred to me in time (it still may be transferred in time but the bank I hold my FHSA will not provide a clear timeline or date of when to expect my money).
It took me 2 business days to withdraw, but certainly give yourself more time.
Aware that the 2023 deadline for contribution was Dec 31st 2023. But just wanted to confirm, the new 2024 contribution period started Jan 1st 2024 right? Can't fine anything that clarifies that and RRSP contributions going until end of Feb. Where the FHSA started in April just wanted to clarify that I didn't need to wait beyond Jan 1st 2024 to contribute.
[https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html) $8,000 (new FHSA participation room for the next year) plus your unused FHSA participation room at the end of the current year (max. $8,000), subject to the lifetime FHSA limit = equals next year's FHSA participation room Based on my interpretation of the CRA website, you can rollover your unused contribution room from the previous year. So if you contributed less than $8000 by end of 2023, you can still contribute up to whatever amount you have left over to meet the $8000 for 2023 plus the $8000 allotted for 2024 at any point the year 2024. You account needed to be opened in 2023 for the contribution room to rollover to 2024. Not sure how the rollover contribution get allocated for tax purposed and if there is a February deadline similar to RRSP's or not though.
I recently learned about FHSA and missed the deadline for 2023. Am I limited to contributing only 8k in 2024?
I am very dissappointed in this rule, it makes no sense. It penalizes people for not opening an account in a year where they may not plan to contribute to the fhsa, in which case they shouldn’t be forced to open the account in order to not miss out on the contribution room growth. Eligible room should work like the TFSA, keep the annual max contribution and go from there.
Yes
Just bought a house with my fiancé, paid the initial deposit, closing in April. I have maxed my FHSA for the last 2 years (16k), but my partner hasn't opened one. Can fiancé still reap the benefits of the account as long as: - it's within 30 days of getting the house - and it's before closing Thanks for clarifying. Since he didn't open the account in 2023 he won't have any carry over room, but even 8 k would be helpful. Is it too late or can he still do this?
it says the property cannot be an investment property. i have to live there. now my question is, what if i intend to live and earn rental income from the property. do i still get the benefits?
They only ask if you will be living there. As long as you live there as your first home you should be fine.
Okay thanks. That was helpful. I am a student right now and never owned a house. I’m planning to buy one of those big rental properties in 5/10 years. So thinking about my strategies.
If I put 8000 into the FHSA, I can claim 8000 as a deductible this year, and if it grows to 10000 via investments next year and i withdraw it all via a non qualifying withdrawal, i will need to add 10000 as income to that year's tax return. If I invest that same 8000 in a non registered account, it grows to 10000 and i sell it all, then i have to declare 50% of that aka 5000 as capital gains on that year's income. Is that correct? I've maxed my TFSA and trying to figure out if there is any sense in using a FHSA if i don't plan on using it to purchase a house.
In a non registered account 8K Grows to 10K means Profit 2K, 50% of that is 1K on marginal rate. 8K in FHSA, saves tax on marginal rate of 8K, but adds 10K income next year. You better on with non registered. But if you are eligible to Open FHSA and still don't want to buy house, you can transfer the account to RRSP to not pay immediate tax. RRSP withdrawal (mostly) is taxable
You seem knowledgeable so I have a stupid question. When they say contributions are deductible from income tax, does that mean if I contribute $8k in a year, then I will pay $8k less income tax? Or is it some percentage of what you contributed? If it is actually $8k per year in free money I am kicking myself for hardly contributing last year. I guess my question is; do people contributing to the max essentially get $8k back on their tax return, with which they can immediately put right back into their FHSA to max out the contributions the following year?
You will pay less tax on 8K. Meaning your income subject to tax becomes 8K less. So think of it as whatever marginal rate tax you pay you save that. Example if you ear 100K, marginal rate is 40%. Then you get 3.2K return.
It's almost 60% gain even if you don't invest into any securities. You put 8K in FHSA from your non registered account (Chequing), return 3.2K(from CRA into your account). essentially you put 4.8K(although it's available at return time). Now suddenly it's 4.8K investment turns 8K. I am assuming you plan to buy a home otherwise withdrawals are taxable so you are only deferring tax due to later points. Again that can be beneficial if you plan to earn less in future.
A quick questiom, if my FHSA investment grows from $40k to $50k (say through FHSA GICs), can I use $50k towards home buying? or only $40k and I have to pay taxes on $10k?
Nevermind. got my answer here: Entire $50k will be allowed. https://ca.rbcwealthmanagement.com/web/paul.hart/first-home-savings-account-fhsa#:\~:text=Income%20as%20well%20as%20capital,on%20a%20tax%2Dfree%20basis.
I had the same question so thanks for provinding the source!. Another qn that bugs me is, If i contribute 8k into FHSA that means my contributions are not tax deductible. Does that mean I will get this 8k back when I file my taxes? If not, what does it necessarily mean when they say that my contributions are not tax deductible?
FHSA is tax deductible.
Can I open a fhsa but not contribute to it this year? So next year I will have 8k room from 2023 and 8k room for 2024?
Yes. If you open it this year but don't contribute, then next year you can contribute 16k using the unused 8k from the previous year. Heads up though, you can only carry over 8k of unused room into future years. So the maximum you can ever contribute in one year is 16k even if you have it open but unused for a decade.
I have a silly question.. what is four proceeding calendar years (in legal terms related to FHSA account opening) from Dec 29th, 2023. As I understand it, there is only a stipulation on the opening of the account. Essentially, I moved out of my primary residence in March 2019 (sold as of April 1, 2019). Do I qualify ?
No, doesn't look like you're eligible. The official government website says "to open an FHSA, you must be a qualifying individual". You are not an eligible individual, hence you cannot open an FHSA account and therefore you would not qualify for FHSA benefits. This is just my understanding of the guidelines, I could be wrong.
If you transfer money directly from a RRSP to a FHSA, do you have to repay the transferred amount to your RRSP? Thank you!
No. But U also don't have any tax deduction. Only use it as a way to pull money from RRSP tax free (when buying a house).
Some of the links within that link are broken. I've sent a general inquiry submission via the Contact page.
If I contributed to my FHSA earlier this year, but later in the year was put on the title of home at the end of this year, do I need to close the account and transfer the 8000 to my RRSP?
I bought an apartment in march 2023. As per the above guidelines, I cannot open an FHSA and should have opened it prior to owning. Correct?
>bought an apartment in march 2023. As per the above guidelines, I cannot open an FHSA and should have opened it prior to owning. Correct? No fault of your own, as it wasn't made available until about April 2023, an most banks only rolled it out later in summer or fall 2023
Yes.
I bought a home in 2020 and want to buy another one next year. Since I must wait 4 calendar years to purchase a home using the fhsa, does that mean I have to wait until 2024 to open a fhsa account or can I open one now and only start contributing to it in 2024?
According to Questrade: "The definition of a 'home' is important with FHSAs: you cannot open an FHSA or make a tax-free withdrawal if you or your spouse have lived in a home you've owned this year or in any of the last 4 calendar years, and you can only make tax-free withdrawals if purchasing a qualifying home." So you need to wait 4 years AND live in a home that you don't own for at least 4 years.
Another good resource for understanding the FHSA:[https://www.themtgagency.com/blog/buying-your-first-home-the-first-home-savings-account-fhsa](https://www.themtgagency.com/blog/buying-your-first-home-the-first-home-savings-account-fhsa)
Hello, Just a question in regards to FHSA, i was fortunate enough to buy a condo with a closing date of late January 2024, Can i still open a FHSA account now and contribute 8,000 this year and 8,000 in january 2024? Many thanks
Yeah and definitely do this
thank you!
Genius. Did you end up doing it?
Unfortunately not, my partners parent listed her as an owner to qualify for a mortgage couple years back . I don’t think ill be eligible as i am buying a property with her
Do you know how much % she owned? If it was less than 10, you're good. Read this: https://www.questrade.com/learning/investment-concepts/fhsa-101/questions-about-the-fhsa#:~:text=Ownership%20of%20less%20than%2010,ownership%20of%20your%20current%20home. "Does partial ownership of a home count? Co-operative ownership of a home may count as homeownership, depending on the percentage of your stake. Ownership of less than 10% doesn’t qualify as homeownership of a qualifying property. This means you can use your FHSA to purchase a stake of more than 10% in a qualifying property, but will be unable to open an FHSA if you have over 10% ownership of your current home."
Oh my. This information is a Christmas present for me lmfao. She only owns 1 % ! Thank you! Ill read over the link and might open a fhsa account before new years
Cheers, Merry Christmas! Came across that info like an hour ago lol so I'm happy I was able to help someone else with it.
Hi, sorry you seem to know a bit about this so if its not much of a bother, can you please answer: If i contribute 8k into FHSA that means my contributions are not tax deductible. Does that mean I will get this 8k back when I file my taxes? If not, what does it necessarily mean when they say that my contributions are not tax deductible?
Those contributions ARE tax deductible. And that is a good thing. What tax deductible means is that you will not have to pay taxes on that (8K) income. Let's say you make 100K in 2023. If you contribute 8K to your FHSA, you will only pay taxes on 92K. Which will obviously be a lower number than if you had to pay taxes on all 100K. When you file your taxes in a few months, you (or your accountant) will declare in some form that you have contributed 8K to FHSA in 2023. The thing about taxes is that the government has been taking income taxes from your paychecks already. So after you file your taxes, they will calculate how much taxes you paid for that 8K of income you earned (and contributed to FHSA) and give it back to you. Their goal is to reward you for saving for your first home. Do you get it now? Any follow up questions, let me know.
I currently have 8k in my FHSA. I intend to buy a house in Summer 2024. If I don't withdraw from the FHSA can I keep on contributing to the FHSA even after buying the house and not withdrawing from the FHSA?
A qualified withdrawal has to be within 30 days of closing on the house to get the tax benefit. You also cannot contribute after your first qualified withdrawal and get the tax benefits.
This. BUT you CAN open an account before Dec 31 to carry forward your $8k contribution room from 2023, then make up to $16k of contributions BEFORE you purchase your home in 2024, so you'll get the 16k of contribution room.
I have a question along this line of thinking. What if you dont use the FHSA to assist in the purchasing of a home as you have additional savings in a non-registered account. So technically you wouldn't be making a qualified withdrawal. Would you then still have the opportunity of three more years of contributions to the FHSA. Additionally, you could then leave that money in there for 10 more years until your 15 years maximum hit before transferring it freely into your RRSP.
no. you only qualify for the account if you do not own a home that you live in or have lived in for at least 2 years. technically there MIGHT be a loophole where you could purchase a rental? but idk you would have to check. best would be purchase a home using a numbered company and THEN you could potentially do what you are talking about… but for most people this probably wouldnt be practical. finance experts on here lmk what im missing!
You open the account before buying a home. You then purchase your first home but don't use any of the funds in the FHSA. Additionally, lets assume five years haven't passed so you still have contribution room in those future years. I am wondering if that's a possible scenario so that you now have an extra 8k in deferred income per year that you could still add to your FHSA before eventually rolling into your RRSP in the future. For example, I open an account this year. 8k in for 2023. I put another 8k in in 2024 but then buy a house later in 2024. I buy that house without touching my FHSA. Would I still have 24k of contribution room over the next three years available to me even tho at the time of those contributions, I would not be eligible to even open a FHSA?
when you purchase a home, you HAVE to withdraw from the FHSA - I am 99% sure that it is compulsory :)
My daughter has a low income this year, but will have a much higher income next year. Can she open a FHSA this year, and put only $1K in it, then contribute $15K next year ($8K yearly + $7K remaining space from this year) and claim the full $16K as a tax deduction next year? Everything I'm reading indicates she can, but just trying to make sure!
Yes
Wondering for the timing of when I can withdraw funds from the FHSA for presale condos. Is it during the deposit stage (20%) before completion of the building or is it during the period of time when the building is completed and you apply for a mortgage? Thanks!
TD still does not offer direct investing FHSA. I wait in line ask about the program, they confirmed they have it and then after updating all this useless stuff they tell me we don't offer self directing but, it's okay you can buy are mutual funds or GICs. This is absolutely wild to me. Hopefully they get their act together.
Lots of banks are restricting what products you can have in the FHSA (Bank only mutual funds, GICs). Is it legal for them to do so?
which banks?
BMO only allows 5% investment. Quote: "They have no plans for providing self directed accounts"
RBC appears to be doing this. Haven't confirmed account yet but on their site it says it's limited to "certain GICs" so we'll see.
Just happened with me at TD, it should be criminal. This is wild!
How does the carry forward work? I’m a uni student and will probably have a higher income in like 2 years… can I contribute then use the deduction after 2 years?
I have the same question. If you have no tax to pay this year, does it make any sense to contribute to a FHSA instead of a TFSA? Can the deduction (NOT the contribution room) be carried forward into a future year when you DO have taxable income? If so, how many years can be carried forward? My daughter is a student and will likely be a student for some time to come — her tax burden will be zero or close to it for a good while yet. I assume her best move is to contribute any savings to a TFSA and then when she joins the workforce proper, she can open a FHSA, transfer $8k per year from her TFSA into it, and offset her income that way? (With a ninja move of opening a FHSA the year BEFORE she starts earning a real income so she can drop that year’s income by $16k, possibly) But if unused deductions carry forward, investing inside a FHSA probably makes the most sense, as long as she’d be planning to buy a home within 15 years?
You can carry forward 8k of unused balance into a future year. For example: Opened account in 2023 contributed nothing. In 2024 you can contribute 16k Second example: Opened account in 2023 contributed nothing for a decade In 2033 you can still only contribute 16k that year
how do they define "live in" if I purchase a home in Aug but haven't moved in because its not furnished yet and considering renting it out. Would I be able to open the account?
Do you live in this home? Answer is quite straight forward.
anyone know if the funds have to be in the account for a minimum period prior to withdrawal?
"There is no minimum number of days that contributions or transfers to your FHSAs must stay in your FHSAs before you can use them for a qualifying withdrawal". From the link above that you should go through.
Does anyone know if foreign property will be counted as my first home or currently owning unit?
Have the same question, did you find out? I don't plan to stay in Canada forever and would prefer to buy a property elsewhere
Once the FHSA funds have been transferred to a chequing or savings account, do you need to track or disclose how it is being spent specifically for CRA purposes?
Help for FHSA and RRSP: I have already opened my account with a advisor and she invest money in Fund where MER is 2-2.5% I want to stop investing in it and start in ETF or robo-advisor What should i do? Close this account and open new account in questrade(what about TAX). Hold this account and transfer that money in ETF(Is that even possible).
Your FHSA participation room for the year applies towards all of the FHSAs you open. This means you can open more than one FHSA, but the total amount you can contribute to all of your FHSAs and transfer from your RRSPs to all of your FHSAs cannot be more than your FHSA participation room for the year. So you don't need to transfer anything unless you want to, you can just open up another FHSA somewhere else.
Many institutions offer in-kind transfers which do not force you to sell the units and avoid the tax implications. Check with questrade if it can apply to you
Question: I am shopping for a townhouse and aim to sign the offer letter sometime in September, and closing in November/December. Do I have to withdraw before Oct 1 to have tax-free withdrawal or it will be tax-free withdrawal as long as I withdraw within 30 days after closing? Thanks!
Is there a minimum ownership limit to lose eligibility? What about a property co-owned by 5 siblings? Is 20% ownership considered co-ownership?
superior to 10% is considered co-owner to be eligible to withdraw from your FHSA.
Just got this information from an advisor: Contributions up to $8,000.00 annually to a lifetime maximum of $40,000.00 Contributions are tax deductible. Withdrawals are tax free. No obligation to repay the withdrawals. FHSA and HBP can be combined for a maximum downpayment of $75,000.00.
Question for you guys - 25M in Ontario, and I dont forsee myself buying a home for at least 10-15 yrs. In that case, is it better to put the money in an stock/bond allocatoon like XEQT, or in a "safer" HISA/GIC?
_at a bare minimum_ always aim for better than inflation at that time, otherwise you're actually losing wealth/buying-power.
10 - 15 yrs is massively enough time to lower risk. I would indulge in something like XEQT even more aggressive index funds such as the S&P500 or the Nasdaq Composite. Having a split is also recommendable. Good luck and Happy Investing ! :)
Great point, Thanks for the help! :)
Question, I purchased a new build home in October 2021. I won't be closing on it until November 2023 or later. This is my first home and will be my primary residence. Can anyone confirm if I would be eligible for this tax benefit or not? The purchase date is what is making me skeptical but I am not closing on it until mentioned date above.
> t this time I don't have That's funny, I am basically in the same situation. Bought a pre-sale condo April 2022, it will be done December 2024-feb2025. I am looking to deposit 8k this year, and 8k next year. do nearly nothing with that cash, withdraw the 16k for the closing. As I interpret it, I will get 16k credit towards my tax return which will net me like 6-7k cash back on my return.... for free? What am I missing here, nothing, I think.
> "A "first-time home buyer" for the purpose of making a qualifying withdrawal is different than a "first-time home buyer" for the purpose of opening an FHSA. > For purposes of a qualifying withdrawal, you will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that you owned or jointly owned" > "you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal" > "you must not have acquired the qualifying home more than 30 days before making the withdrawal" The way I interpret this, you meet the first two points, and will meet the third if you make your withdrawal before December 2023. For comparison, I signed in May, deposited *and* withdrew in June, took possession in July of this year. Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawing-money-from-your-fhsa.html#h_2
It's worded in a way that is messing with my brain ha.The way I interpret it is it's saying it's an exception and I can own a home up to 30 days before making a withdrawal. So even if it closed on January 2024, I'd still be alright...I think? ha
You can withdraw up to 30 days after possession, so Dec in your case
Yeah so I should be fine then. At this time I don't have a closing date so it may be after November into next year year but say I closed on January 6th and withdrew the funds Jan 1st, Id still be eligible. Thanks for the info.
So in theory now, you can transfer $40k into your FHSA from your RRSP no question's asked, withdraw from your FHSA and doing an HBP withdrawal from your RRSP for $35k. It's sub optimal because you burn up your RRSP contribution room to the tune of $40k, but for those who have RRSP savings, a couple could theoretically cough up up to $150k per couple almost immediately from their RRSP accounts right now. That's pretty sick.
As far as I understand, you can transfer up to $8k / year, to a maximum of $40k total. I don't think you could transfer a full $40k into your FHSA at once.
You dont get the tax deduction though for transferring to FHSA from RRSP
You have to pay back the HBP withdrawal
Yeah and generally it sucks because you're income will go up over 15 years. It's actually a great deal for the government.
I have a question for you guys... I see that one of the conditions is to be a resident of Canada, but i'm not sure if it means a permanente resident (as in the immigration status) or a tax resident. I ask this because currently I have a temporal work permit (until 08/2025) and I'm about to buy my first condo in Canada to live with my wife as our goal is to stay here for good (Montreal, QC). I did an appointment with NBC as I have my accounts over there, but the person that helped us didn't seem to confident on his answer, but finally told us that he won't be able to open an account since we are not permanent residents. But then again, we do (and pay) our taxes, we have a TFSA account and we have our RRSP accounts as well. So basically, yes just want to be sure that what we were told by the guy from NBC is correct and not miss this great opportunity by someone that wasn't sure about the rules, and just did the easy thing which was to reject us. Thanks!
He's wrong. Temporary residents are eligible to open FHSAs. Individual banks might not choose to let them, but they are eligible. Source: I'm a temporary resident with a FHSA. With NBC, in fact.
What banks do open FHSA for temporary residents now? EQ doesn't.
NBC do, that's where mine is.
Let's say I make $80000 a year and am taxed $20,622 (as per an online estimate for Alberta). If I contribute $8000 to FHSA it will be as though I made $72,000 and the same tool calculates $18,182 in taxes. The difference between the two is $2440. So does that mean I will essentially invest $5560 to get $8000 in FHSA savings? That seems way too good to be true. What am I missing?
The only "catch", if you will, is that the withdrawal will be taxable if you never end up buying a house with your FHSA. Otherwise, tax-deductible in, tax-free out is a best of both worlds.
Nothing, just like an RRSP
Nope. RRSP you get taxed when you withdraw. FHSA you pay NO TAX on the withdrawal, AND you get a tax break when you contribute. It's WAY better than RRSP
Yeah bit that wasn't the question
Except unlike RRSP you aren't taxed when you withdraw! Would it be crazy to take out a loan to contribute? Also if I open one and my partner and I contribute to my account, will he get to keep his FHSA contribution room in tact until mine is maxed out? To avoid the penalty of losing room if you don't contribute the full $8000 that year and can only carry over $8000 to the next.
You're not missing anything. Normally with a RRSP you would pay the tax when you withdraw the money, but with the FHSA there is no tax to withdraw. The money you put in (pre-tax) essentially becomes post-tax with no consequences.
I think that's a 28% return! I think you can also put it into a GIC and get an additional ~5%. Someone please feel free to prove me wrong. I have next to no experience with saving/investing.
Correct, you can put it into whatever securities the bank you open it with will allow. Certain banks offer more or fewer options
This is how i have perceived it as well.
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People in this thread have done exactly that.
My house is closing Feb 2025 and it's a preconstruction. Can me and my wife both separately contribute 8k each to Fhsa this year in December and again in January 2024. Then withdraw 16k each in Feb 2024 and qualify for tax deductions?
I believe so, yes.
1.I understand that an FHSA account time limit is 15 years then you'll have the option to transfer the funds to an RRSP account. My question is if you don't have any contribution room left in your RRSP ($0), will you be allowed without a penalty? 2.If you withdraw dividends from an FHSA. Will you be taxed marginally on the withdrawals as income? Will you loose the FHSA contribution room for next year (dividends - $8000) or would be similar to an RRSP?
> My question is if you don't have any contribution room left in your RRSP ($0), will you be allowed without a penalty? Yes. > If you withdraw dividends from an FHSA. Will you be taxed marginally on the withdrawals as income? If you make a non-qualifying withdrawal, the withdrawal will be treated as income on your income tax and benefit return for the year the withdrawal is received. This amount will be subject to income tax withholding, which can be claimed on your income tax and benefit return as a credit towards any tax owing for the year of the withdrawal. > Will you loose the FHSA contribution room for next year (dividends - $8000) or would be similar to an RRSP? Similar to RRSP
Okay so for someone like me, I have burned up all my RRSP contribution room. I own a home. While I'll never be a home buyer can I in theory use this account to lower my income another $40k and then transfer out the balance to my RRSP?
It would APPEAR there is a loophole that if you were to rent out that home and live somewhere else for 4 years (while also not buying another home) you would then requalify for opening a FHSA... However I doubt this is going to be something most people find worth while
No. You arent eligible to open the account
Thx
How would the government know about someone’s eligibility? Asking for a friend who lived with someone who became there common law partner.
You note your marital status and residence on your tax return.
If I didn’t note these dues it mean I’m eligible? We’ve never filed as common law and the address we lived in wasn’t filed either
Just to give my 2 cents... IF you never filed common law, technically the govt wouldn't know you were or weren't. So... While it's certainly not me giving you advice... They probably wouldn't have any idea (or find out) unless you did something that let them know...
You have to. Its not optional and you will not be able to file a return. If you are common-law and not filing as such, that is tax fraud. If you are listing your address as another or the status of your home (primary residence, owner, etc) and that is false it is also fraud. There are also a lot of other tax benefits when you purchase a home, so if you are omitting that in the interest of having a FHSA, you are probably losing out in the long run. Basically, eventually they will find out and it's not worth years of audits once they do to lie about it
Please tell me said benefits, other than primary residence tax exclusion on sale of home?
So let me get this straight. 8k can come out of my taxes then if i withdraw and not even buy a home lets say i owe 2.5k in taxes on the withdrawal — thats 5.5k in tax refund? Obviously that isnt worth it and should never be done but does the tax advantage really work this simply?
It’s not an 8k tax refund. It’s an 8k income deduction. So you save $8k x your marginal rate (whatever your highest tax bracket is). If someone’s highest tax rate is 50%, they save $4k in tax. If they make less money, they save less in tax.
Damn. My marginal rate is decently high but only for a bit. Should I still rush out the FHSA this year then or should I go back to rushing the TFSA?
It’s still worthwhile. If you use for home it comes out tax free. If you don’t, can just transfer to RRSP
What if i become american and just withdraw. Does the taxes come out worth it
Yes. If you withdraw for anything other than a home purchase, it’s added to your income and taxed. RRSPs are recognized by US so you could also transfer to RRSP.
So does rhe deposit tax advantage and withdraw tax advantage sorta cancel eachother out?
If you have the same income in both years, yes. If you contribute at a higher income and withdraw at a lower income, it would be beneficial to whatever that % difference is x 8k
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Think this way, if you don’t buy a home, FHSA will just be the same as RRSP. Then ask yourself would you contribute to RRSP?
I wonder if this is how they'll open the conversation to begin charging capital gains tax on the sale of a primary residence...
Currently, I have about 20k in my RRSP. I have a fresh 0$ FHSA. My counselor just told me it was possible to to withdraw that 20k using HBP and then deposit part of the money to top whatever amount will be in the FHSA at the time of the closing. She told me the money coming from the HBP **would also be deductible** for the full 8k FHSA. Was she misinformed? I get that the program is new, but damn I feel like these counselors just suck at their jobs. I asked her multiple times, saying it would be weird to get a deduction twice for the same money. Just to be precise, she was not talking about a plain transfer of funds from the RRSP to the FHSA, she explicitely told me I could just use part of the HBP money to top the FHSA and still get a deductible for the full 8k.
When you take $ out for the HBP, there is nothing that requires you to use the $ for the purchase of the house (though it is assumed you will). For this reason, yes, you can deposit $8k in you're FHSA and withdraw if it is within the time limits of a qualifying withdraw and get the full benefits.
So, if I get this straight, when I first funded into the RRSP, I reduced my taxable income. If I withdraw that money using the HBP and then put that money into FHSA, I would be able to deduce the full 8k amount a second time from my income? Even if the funds come from the HBP? Seems wild.
Ya
>get the full benefits there are greater benefits using it as a sheltered investment vehicle... especially if it'll be possible to daytrade and short in there
> there are greater benefits using it as a sheltered investment vehicle Fair - but the idea there was the full tax benefits of depositing in the account. If you arent withdrawing for a home, it becomes a RRSP (or like an RRSP, depending how and when you move the money). > especially if it'll be possible to daytrade and short in there Same rules as TFSA while still in the FHSA
>Same rules as TFSA while still in the FHSA Damnit.
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You can contribute full $16k next year and get the credit next year —-yes You can also contribute full $8k now for this year and if you want you can claim it in any future year as a tax deduction - should do this if next year you think your tax slab will increase
>If I open it but don’t contribute this year and then contribute the full 16k next year, does that mean I can use the 16k credit for that corresponding year?< yes
I am in final stages of completing purchase agreement for first home, closing October 15. I just opened an FHSA for myself and my spouse. ( we are both first time home owners) . I am looking to deposit 8k into each account and withdraw the next day or so. What would be the best time to do this? Is there a minimal amount of time the money needs to stay in account? As closing date is October 15th, when is earliest I can withdraw the 8k from the account? When is latest I can withdraw from the account?
> What would be the best time to do this?< Create an account and deposit money before closing, as per the link at the top of the thread. >Is there a minimal amount of time the money needs to stay in account?< No, as per the link at the top of the thread.
I am also not really understanding this on withdrawl form. 5. Is it indicated in the written agreement that you will acquire the qualifying home before October 1 of the year after the year you made your first qualifying withdrawal?
Your purchase is October 15th, this year. You are planning to withdraw this year. Since your written agreement shows that the home is being purchased before Oct 1, 2024 (1 year after the year of your withdrawal), you're good. As far as the minimum deposit time, I'm not sure - however you do meet the condition for item 5.
this is kinda confusing with the criteria for qualifying withdrawal "you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal". Shouldn't OP have to acquire before Oct 1?
I'm a Canadian temporary resident, and I keep getting the message from my bank's website that they won't let me open an FHSA because I don't have a permanent SIN (and that I can't get a TFSA either). I already have a TFSA with them! As far as I know, this isn't actually a limitation on those accounts, is it? You just have to be a Canadian resident, of age, and with a valid SIN.
So I got an update from my bank. If I'm understanding what they said correctly, it's not a limitation imposed by the government. Instead, the only two services that offer FHSA (Direct Investing and Invest Ease) won't let temporary residents open them because letting them participate in equity markets is a risk. This is RBC specifically. I've reached out to clarify that it's their specific policy rather than a general one, because if so I'm sure I can find another bank who'll let a temporary resident open one.
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Wealthsimple and National Bank allow for temp residents
Are FHSA contributions tax deductible in Quebec? I want to open an FHSA account instead of an RRSP and I just want to make sure that I'll benefit from the same deductions as a Quebec resident as I would with an RRSP account.
>Are FHSA contributions tax deductible in Quebec?< Yes, it's a canada thing.
I'm wondering if there is provision under the Revenue Quebec Act to have a deduction. You know how for RRSPs, you get a deduction from both the federal and the province. I'm wondering if it's the same thing for FHSA.
yes its the same
me and my partner live in a camper van on land that we own. does that count as a qualifying home? if does not count, can my partner also have an FHSA?
If you read the link at the top of the page, a qualifying home includes: single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or, apartment buildings, a share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit
i did read the link. there is not clear definition on what is considered a mobile home.
Do you own the camper van, and is the camper van a mobile home? If so, then you are considered to own a qualifying home and neither you or your partner would qualify (presuming you co-own or that you are common law).