The First Home Savings Account – A Key to Savings for First-Time Home Buyers

  • May 28, 2024
  • Jennifer Corak, Michael Ding and Sanaya Mistry, WeirFoulds LLP

With the increase in housing prices, the announcement of the First Home Savings Account (“FHSA”) in 2023 was welcome news for many Canadians. Not only does this type of account allow qualifying individuals to save for their first home purchase, there are also tax advantages associated with contributions into an FHSA. In this article we discuss some key questions related to the FHSA, including at a high level what it is, how it can be used and what happens if an individual dies holding an FHSA.[1]

What is the FHSA?

An FHSA is a registered plan allowing first-time homebuyers to save up to $40,000 in tax-sheltered savings towards the purchase of a first home.

Who is eligible to open an FHSA?

In order to open an FHSA, an individual must:

  • be 18 years of age or older;[2]
  • be a tax resident of Canada;
  • not live in a qualifying home[3] (or what would be a qualifying home if it were located in Canada) as their principal place of residence that they owned or jointly owned in the calendar year or in the previous four calendar years; and
  • not live in a qualifying home[4] (or what would be a qualifying home if it were located in Canada) as their principal place of residence that their spouse or common-law partner owned or jointly owned in the calendar year or in the previous four calendar years, or, not have a spouse or common-law partner at the time the account is opened.