The Government rolled out a better way to save for your first home here in British Columbia. In my personal and professional opinion, I believe it is a way better program than the RRSP for first-time homebuyers. So luckily for you, here is the breakdown of what the FHSA is, who qualifies for it and why it is so beneficial to you.
What is an FHSA?
A first home savings account (FHSA) is a registered plan allowing you, as a first-time home buyer, to save for your first home tax-free (up to certain limits). You will be able to open an FHSA starting April 1, 2023.
Who can open an FHSA?
You must meet all of the requirements in order to open this account:
must be 18 years and older;
a resident of Canada;
a first-time homebuyer
How to open an FHSA:
through your bank, credit union, trust or insurance company;
you will need your social insurance number, date of birth, and any other supporting documents that may be requested from you
What are the different types of FHSAs?
a depository FHSA
an account (with a financial institution) that holds money, term deposits, or guaranteed investment certificates (GICs)
a trusteed FHSA
a trust (with a trust company as trustee) that holds qualified investments such as money, term deposits, GICs, government and corporate bonds, mutual funds, and securities listed on a designated stock exchange
an insured FHSA
an annuity contract (with a licensed annuity provider)
self-directed FHSA
if you prefer to build and manage your investment portfolio by buying and selling different types of qualified investments.
When can you close an FHSA account?
the year following your first qualifying withdrawal
you turned 71 years old
the 15th anniversary of making this account
What is your first qualifying withdrawal?
All of the following conditions must be met in order to qualify for a withdrawal:
you must fill out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and give it to your FHSA issuer
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
you must occupy or intend to occupy the qualifying home as your principal place of residence within one year after buying or building it
How much can you contribute?
Your FHSA participation room in the year that you open your first FHSA =$8,000.
The lifetime FHSA limit =$40,000.
Please note that the contribution room does not start until you open the account and it will carry over to the next year if not used up. You may open more than one FHSA account so be careful not to over-contribute.
There is a ton of information and ruling regarding this new account so I highly suggest you read more about it on the Canadian government website and reach out to your financial institution.
Happy Savings!
And as always, please feel free to reach out with any real estate inquiries.
Your local real estate agent,
Nina Djuric
778.908.1440
soldwnina@gmail.com
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