First Home Savings Account (FHSA)
Save for your first home tax-free with an FHSA, which combines features from both an RRSP and a TFSA. Contributions to an FHSA are tax-deductible, and when used to buy a qualifying first home, withdrawals and income gains are tax-free.1
FHSA features
Tax-deductible contributions
Eligible contributions are tax-deductible, allowing you to deduct the contributed amount from your taxable income for the year, leading to immediate tax savings.1
Tax-free investment growth
Your investment earnings grow tax-free provided you stay within your contribution limits.1
Tax-free withdrawals for your first home
Withdrawals for the purchase of a qualifying home are tax-free.1
Eligibility1
Contribution limits1
- Contribute annually up to $8,000 tax-free
- The lifetime contribution limit is $40,000
- Unused contribution room can carry over to the following year
- Account can stay open for a maximum of 15 years or the year you turn 71, whichever comes first
FHSA: FAQs
A First Home Savings Account (FHSA) is a tax-advantaged registered savings account designed to help eligible first-time homebuyers in Canada save for their first home.
An FHSA brings together elements from both an RRSP and a TFSA. When you contribute, you can usually deduct it from your taxes, and when you make a qualifying withdrawal, you won’t be taxed on the amount you take out.1
You have the flexibility to save for a home on your timeline, whether you plan to become a homeowner soon or in a few years.1
- The lifetime contribution limit is $40,000
- Contribute annually up to $8,000 tax-free
- Unused contribution room of up to $8,000 can carry over to the following year
- Account can remain open for a maximum of 15 years, or the year you turn 71, whichever comes first
Ready to buy your first home? Your contributions and income gains are tax-free when you meet the FHSA withdrawal conditions:1
- You must be a first-time homebuyer3
- The qualifying home must be in Canada
- A written agreement to buy or build a property before October 1 of the year following your first withdrawal
- You intend to live in the qualifying home as your principal residence within one year of buying or building it
The funds in a FHSA grow tax-free and the withdrawals are tax-free if you meet the conditions to buy a qualifying home.
If you don’t buy a home, you can:1
- Withdraw funds – funds not used to purchase a qualifying home are subject to income tax.
- Transfer funds – funds in your FHSA not used to purchase a qualifying home can be transferred to an RRSP. This allows you to continue saving for retirement and preserve the tax benefits of the FHSA.
No, the FHSA is an individual account and can’t be held jointly with another person. You and your spouse or common-law partner can each open an FHSA provided you are both first-time homebuyers.
Yes. Both you and your spouse or common-law partner can open individual FHSAs and use the money in them to buy a qualifying home.
If you contribute more than the allowed amount to your FHSA, you will incur a 1% penalty on the excess contribution.1 This penalty will continue until you either withdraw the extra amount or wait for additional contribution room to become available, eliminating the excess.
Eligible contributions made to an FHSA are tax-deductible, allowing you to deduct them from your taxable income and thereby reduce the amount of tax owed for the year. Contributions are considered eligible if they meet the annual contribution limits, with individuals able to contribute up to $8,000 per year and a lifetime contribution limit of $40,000 over the FHSA’s 15-year lifespan.1
To open an FHSA through UCU, the first step is to become a member of our credit union. Once you’ve joined UCU, you have the option to open an FHSA by either visiting one of our conveniently located branches or reaching out to the UCU Contact Centre at 1.800.461.0777. Our friendly staff will guide you through the process.
Whether you should open an FHSA (First Home Savings Account) or a TFSA (Tax-Free Savings Account) first depends on your financial goals and priorities. If your primary objective is to save for a first home purchase, you might consider opening an FHSA first to take advantage of its specific benefits for first-time homebuyers.3 However, if you have other financial goals or need flexibility in how you use your savings, opening a TFSA first might be more suitable. It’s essential to evaluate your circumstances and consult with a financial advisor to determine the best approach for you. You can reach out to the UCU Contact Centre at 1.800.461.0777.
Whether it’s worth opening an FHSA (First Home Savings Account) depends on your financial situation, goals, and priorities. If you are a first-time homebuyer and are looking for a tax-advantaged way to save specifically for your first home, an FHSA could be beneficial. It offers tax deductions on contributions and tax-free withdrawals for eligible home-related expenses. It’s essential to consider factors such as contribution limits, withdrawal restrictions, interest rates, and fees associated with FHSA accounts.
Opening an FHSA (First Home Savings Account) offers several benefits. Firstly, contributions to an FHSA are typically tax-deductible, thereby reducing your taxable income and potentially lowering your tax bill.1 Additionally, withdrawals for eligible home-related expenses are often tax-free.1 Secondly, an FHSA is specifically designed to assist first-time homebuyers in saving for a down payment and other home-related expenses, providing a focused approach to achieving homeownership.3 Lastly, by opening an FHSA, you establish a dedicated savings account for your home purchase, helping you stay disciplined in saving towards your goal.
01A first home savings account (FHSA) is a registered account for Canadian tax purposes. The features, benefits, contribution limits, rules, and applicable taxes for registered accounts are determined by the Government of Canada. Assets in a FHSA must be eligible contributions under the Income Tax Act.
02Generally, an FHSA can be opened by residents of most provinces at age 18. In certain provinces and territories, the legal age at which an individual can enter into a contract including opening a FHSA is 19. You must be at the age of majority in your province of residence. FHSA cannot be opened after the end of the year you turn 71.
03An individual is considered to be a first-time home buyer if at any time in the part of the calendar year before the account is opened or at any time in the preceding four years they did not live in a qualifying home (or what would be a qualifying home if located in Canada) that either (i) they owned or (ii) their spouse or common-law partner owned (if they have a spouse or common-law partner at the time the account is opened).
04The listed options are eligible to be held within a fist home savings account (FHSA) on May 1, 2024. Eligible types of investments within a FHSA are determined by applicable law and government policy, which may change at any time. For a current list of eligible types of contributions, contact UCU directly to consult with a financial advisor or review the current guidance from the Canada Revenue Agency (CRA) and Income Tax Act (Canada).
05Mutual funds, stocks, ETFs, and bonds, are available through Ukrainian Credit Union Limited’s network arrangements, including through Credential Securities (Aviso Wealth Inc. and its various affiliates).