New Incentive: Tax Free First Time Home-Buyers Savings Account Program

By Slonee Malhotra

Last spring we wrote an article about several incentives available to first time homebuyers, as laid out in the Federal Budget 2022.

Notably, the Budget proposed a Tax-free First Time Home Savings Account program (the “FHSA”). This program would allow Canadians to make tax-free contributions into the account of up to $8,000 a year, up to a maximum lifetime contribution of $40,000.

As of April 1^st, 2023, this FHSA is now in effect.

Eligibility

In order to qualify for this program, individuals must meet all of the following criteria:

• must be a resident of Canada and be at least 18 years old;
• must have not lived in a home that they owned at any time in the year the account is opened, or during the preceding four calendar years; and
• shall not be permitted from making both the FHSA withdrawal and a Home Buyer’s Plan withdrawal for the same home. 

For full details on the FHSA, visit the Government of Canada’s information page. 

As discussed in our previous article, a FHSA is a combination of the features of an RRSP and TFSA. It allows prospective homebuyers to contribute and withdraw funds tax free, if the home purchase fits within the eligibility criteria set out above.

This program is one of many initiatives the Federal and Provincial governments have been spearheading to combat housing unaffordability in Canada.

How Does One Open an FHSA?

An FHSA can be opened through a participating bank or credit union. However, despite the program being ready for implementation, not all supporting Canadian financial institutions are.

Some of Canada’s largest financial institutions are aiming for a summer launch of the programs. Others are aiming for later in the year. The institutions cite technological reasons being the primary root of the delay, as increased coordination with the Canadian Revenue Agency will be required in order to launch the program fully.

Questrade is currently the only reported financial institution that offers the FHSA.

If you have any questions about the FHSA, or any other first time home buyer incentives programs, contact one of our qualified real estate lawyers today!