FHSA First Home Savings Account - What You NEED to Know

These are the key things you need to know about the First Home Savings Account (FHSA).
The Tax-Free First Home Savings Account (FHSA) officially launched on April 1, 2023. With that said, the only financial institution that was ready with the account on launch day was Questrade. Other institutions say they won't be ready until later in the spring or later this year.
Nevertheless, if you want to know how the account works, who is eligible, and some of the big benefits of the account, I go through it all in this video. If you have any questions, please leave them in the comments!
#personalfinance #financialliteracy #FHSA
CHAPTERS
00:00 Introduction
00:55 Eligibility
01:50 Where you can open an account
02:37 What you can put inside an FHSA
04:26 Contributions
09:49 Carry-forwards
10:48 Tax deductions
11:38 Withdrawals
12:31 Closing an FHSA
RESOURCES
📌 FHSA Info on CRA website www.canada.ca/en/revenue-agen...
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ABOUT ME
I'm Jessica Moorhouse, an award-winning money expert, Accredited Financial Counsellor Canada®, speaker, TV personality, and host of the More Money Podcast. I'm based out of Toronto, ON, Canada and turned my personal finance blogging side hustle into a financial education business that has helped thousands of people take control of their lives by taking control of their money. To learn more, check out my website jessicamoorhouse.com
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The content I produce is for education and entertainment purposes only. Nothing on this KZbin channel, my website or affiliated channels should be considered financial, investment or legal advice, or an endorsement for any type of service, product, or brand. Some links in this description may be affiliate links in which I may earn a commission at no extra cost to you. Please read my disclaimer to learn more: jessicamoorhouse.com/disclaimer/

[@lingxiaoyue4750]

Thanks Jess, appreciate all these pieces of info. Holistic and detailed!

[@jessicamoorhouse]

Thank you!

[@mystupidtheories6554]

Thanks for making this video. I’m Canadian just got into a savings plan focused on home buying and my financial advisor didn’t bring this up at all. Definetly time to do some research

[@jessicamoorhouse]

And maybe to find a new advisor, that's wild they didn't even bring up the FHSA as a savings vehicle for buying a home.

[@milhouse7145]

One of the few videos talking about withdrawl and closing process. Thank you. I opened an account Apr 1 with Questrade and made $8000 deposit and bought a house Apr 24 so will be withdrawing/closing soon.

[@jessicamoorhouse]

Congrats on your home purchase!

[@slamdoozle]

Great video!

[@jessicamoorhouse]

Thank you!

[@alissawease7251]

This is so exciting, I’ve been looking into investing over the last 2 years and this account sounds amazing. I can’t wait until my bank is ready to offer this service.

[@jessicamoorhouse]

Fantastic!

[@Oyb14]

The first

[@0526tm]

Thanks for this great video. My question is will I be able to use First Time home buyer incentive along with RRSP AND FHSA? Thanks

[@jessicamoorhouse]

Yes you can use your FHSA and the RRSP First Time Home Buyer plan to purchase a home. I believe I said so in the video but if not I share more details here jessicamoorhouse.com/first-home-savings-account-fhsa-what-you-should-know/

[@brittaevansfenton]

Hey Jessica! One thing I’ve been trying to figure out is if I need to have that money in the account for a particular time before a qualifying withdrawal. Is it like the RRSP and it needs to be in the account for 90 days before using it?

[@jessicamoorhouse]

Couldn't find anything on the CRA's site but National Bank says there is no holding period www.nbc.ca/personal/advice/savings-investment/what-is-the-fhsa.html#:~:text=Minimum%20holding%20period%3A%20There's%20no,before%20they%20can%20be%20withdrawn.

[@brittaevansfenton]

@@jessicamoorhouse thank you!! 🙏🏻

[@MinnieOnCam]

You should add a clip why you are not eligible.

[@jessicamoorhouse]

Well can't really add a new clip haha, but basically if you don't fit the eligibility requirements that means you're ineligible.

[@anapascos3183]

Thank you for such a great video. I've seen a few on FHSA and yours is the most informative. But I still have two questions: 1. If I contribute $40,000 within 5 years, and get super lucky on the stock market and earn another $20,000, but then decide I don't want to purchase a house. Will I be able to transfer the entire $60,000 to my RRSP account without it affecting my RRSP contribution room (effectively increasing my total RRSP room by $60,000)? Or does only the $40,000 get transferred and then I would have to withdraw the interest made and pay income tax? 2. Is the contribution counted every 12 months, or every calendar year? Eg. if I make a deposit of $8000 in May of 2023, can I make another deposit in January of 2024 without penalty?

[@jessicamoorhouse]

1. If you transfer funds from your FHSA to your RRSP/RRIF, the transfer is of the fair market value of what's in your account, not just the principle. In other words, yes you can transfer your initial contributions plus any income or growth you earned. 2. Contributions are counted every calendar year. You get $8,000 in new contribution room every calendar year and can't exceed that $8,000/year room (not including carry-forwards) in a calendar year.

[@anapascos3183]

Thanks for your quick reply! So to confirm #1 this is one way to potentially raise your RRSP contribution room over the next 15 years? I’be maxed out my RRSPs and this would be such a great way to lower my taxes even more. Plus a chance to buy a house. But are there any penalties for not using the money for a house? And simply for transferring into rrps’s after 15 years? (Other than the potential of losing the money on the stock market)?

[@jessicamoorhouse]

@@anapascos3183 I haven't seen any? But since this is kind of a loop whole, I'm curious to see if the CRA shares any more info about this in the coming months.

[@anapascos3183]

@@jessicamoorhouse Thanks so much! Would love un updated video in the coming months, if there are any changes.

[@cook2collect]

Nice info. Can I transfer funds from TFSA to open FHSA? thanks

[@jessicamoorhouse]

You can't do a straight transfer since they are different accounts, but what you could do is withdraw money from your TFSA, then make a contribution to your FHSA.

[@cook2collect]

Thanks, that's what I did, I was able to make it before December ends 😊

[@meagan4306]

Hi Jessica with the earlier statement about living with your common-law partner in the last 4 years if you are no longer living together/relationship ended, can you open an FHSA?

[@jessicamoorhouse]

Answer I got directly from the CRA "To be a qualifying individual who is eligible to open an FHSA, you must be a resident of Canada who is at least 18 years of age and a first-time home buyer. For purposes of opening an FHSA, you will be considered to be a first-time home buyer at a particular time if you did not, at any prior time in the calendar year in which the FHSA is opened or in the four preceding calendar years, live in a qualifying home or what would be a qualifying home if it were located in Canada as your principal place of residence that you own or jointly own, or, that your spouse or common-law partner owned or jointly owned if you have a spouse or common-law partner at that time. This means that if you do not have a spouse or common-law partner at the time you open an FHSA, the fact that your former spouse or former common-law partner previously owned a home would not disqualify you. Provided you yourself have not lived in a qualifying home as a principal place of residence that you owned or jointly owned at any time in the period described above and meet the other eligibility requirements, you would still be considered a first-time home buyer for purposes of opening an FHSA. Note, however, that a former partner is considered to remain your common-law partner for income tax purposes until after you have lived separate and apart for at least 90 days because of the break-up."

[@meagan4306]

@@jessicamoorhouse thank you so much Jessica this is extremely helpful!

[@entertainmentfan1463]

Never heard of this account. Only saw the acronyms FHSA on EQ Bank's page. That said, very informative and I'm planning to take full advantage of this account. Save money in this account RSP style first, and any additional money to save for tax season can go into the RSP. Not sure when I'll be able to buy my first home, but I'm not there yet, so I totally qualify for this home. Though considering how expensive homes are these days, I think it's not too hard to wait for 5 years for the max $40,000 limit.

[@jessicamoorhouse]

FHSA can be a great vehicle to grow your wealth if you don't own a home. Take advantage of those extra tax deductions! :)

[@entertainmentfan1463]

@@jessicamoorhouse Hey Jessica, by any chance can you provide a referal link to sign up with Wealthsimple? I was speaking with their call team and they told me they have 3 separate sign in promotions. The link you provided is to open a investment account, while they have a separate one for simple invitation referral links. This one is the one that will get both of us anywhere between $5-$3000 that's randomly selected. Found out Wealthsimple is one of the places to have FHSA, which makes me wanting to sign up with them even more crucial. Plus they won the get my $10,000+ TFSA account from RBC search since they can cover the entire cost of the transfer.

[@KMiller-qu6xn]

Maxed out my $8000 on April 3rd at QT.

[@jessicamoorhouse]

Nice!

[@RobinGoliboski-gc6qk]

I have never owned a home and still live with my parents. My boyfriend owns a property in which a new house has to be built on it. Would I be able to open this account and in two years time be able to contribute the amount from this account towards the building of what will be our house? Or is it restricted to the purchase of an individual or couples' first principle PROPERTY?

[@jessicamoorhouse]

My assumption would be no but I'd suggest contact the CRA directly as I haven't found anything about this particular scenario yet.

[@bipinlakhani782]

can you use it for an investment property or is it only for a principle?

[@jessicamoorhouse]

Only a principle residence.

[@RAJPATEL-ec8jt]

Thank you for the video. For RRSP, we can withdraw up to 35k for First time home but have to pay back 35k in 15 years. how that works with FHSA? do we have to payback $ that we withdraw from FHSA????

[@jessicamoorhouse]

Nope, you don't have to repay the money you withdraw from your FHSA.

[@Catlandian]

So what happens to people who open it and account when they're single and haven't owned a home and then get into a relationship with someone who has a home? Are they no longer eligible for that account can they just move it into their rrsp?

[@jessicamoorhouse]

Great question and here's the answer I got directly from the CRA "The home ownership status of your spouse or common-law partner is relevant at the time you want to open a FHSA but not after the FHSA is opened. If you were a qualifying individual at the time you opened an FHSA, you can continue to hold the FHSA after you marry or enter into a common-law partnership, even if you begin living in a home owned by your spouse or common-law partner after you open the FHSA."

[@Catlandian]

@@jessicamoorhouse Thank you so much!

[@x780]

Can you have a FHSA in multiple institutions at the same time?

[@jessicamoorhouse]

Absolutely! Only limitation is your overall available contribution room.

[@medaharmoud8594]

Question pls: how can I can withdraw $25 k from my business account without paying tax on it ? Thx

[@jessicamoorhouse]

So this is unrelated to the FHSA? And are you talking about taking money out of your corp? If so, sorry, you've gotta pay corporate tax on that money then personal tax if you tax it out to pay yourself (otherwise it's tax evasion). If you're a sole prop, well then everything you're business earns (minus business expenses) is taxed at your marginal tax rate.

[@Chukboss]

Can i contribute with my already taxed money or does the contribution need to come from an employer - pretax?

[@jessicamoorhouse]

Yes, you're contributing already taxed money but that's why you get a tax deduction for your contributions, just like an RRSP.

[@Chukboss]

@@jessicamoorhouse Thank you.

[@omerfarukbasoglu1729]

What happens if I buy a house after a year when I only have 8K in the account. Can I still contribute towards remaining 32K over the years and withdraw it for making mortgage payments? Or can I use that mine for renovation or something?

[@jessicamoorhouse]

So as soon as you use your FHSA to buy your first home, it must be closed before December 31 of the following year. So no, you can keep contributing to your FHSA after you buy a qualifying home.

[@sherrydoyle7715]

Any idea what it should look like on taxes ?

[@jessicamoorhouse]

For filling taxes here's some info but if you're using tax software it will guide you through it www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/reporting-fhsa-activities-income-benefit-return.html

[@mcgaskinpg]

If I withdraw from it will I get tax? But not the growth?

[@jessicamoorhouse]

If you make a withdrawal to buy a home (following all the specific withdrawal rules), you pay zero tax on that withdrawal. But if you withdraw the money and don't use it to buy a home, the entire withdrawal is taxed at your full marginal tax rate. So you get taxed on the contribution made and any income/growth earned because you received a tax deduction for that contribution making it a pre-tax contribution.

[@kipgold893]

Thanks for information Good job....❤

[@jessicamoorhouse]

Thank you!

[@boyman9787]

So just to confirm if I Open the account in 2023 and don’t contribute anything in 2023 next year in 2024 I will have $16000.00 limit? Correct?

[@jessicamoorhouse]

Yes, you will be able to carry-forward the $8,000 in room from 2023 into 2024. There's a helpful graphic that shows an example of carry-forwards here rsonal/advice-plus/features/posts.understanding-fhsa-contribution-limits.html

[@buddhimamedawaththa2669]

Can a newcomer (TRV) with an open work permit, open this account ?

[@jessicamoorhouse]

Here's the answer I got from the CRA "Only an individual who is a resident of Canada for income tax purposes can open a First Home Savings Account (FHSA). Whether an individual is a resident of Canada for income tax purposes is not related to their status as a permanent resident or refugee for immigration law purposes. Generally, an individual becomes a resident of Canada for income tax purposes, and therefore eligible to open an FHSA, when they have established significant residential ties to Canada, typically on or shortly after settling in Canada. In certain circumstances, an individual may be deemed to be a resident of Canada for tax purposes if, for example, they sojourn in Canada for a total of at least 183 days in a calendar year."

[@buddhimamedawaththa2669]

@@jessicamoorhouse Thank you for your prompt and well explained response Ms. Jessica. Highly appperciate. 😊🤝

[@continentalmasters5432]

Isn’t this almost same as rsp?

[@jessicamoorhouse]

There are similarities for sure but a lot of differences. For example, the FHSA can only be open for 15 years and is only tax-free as long as you use the funds to buy a home. For the RRSP, you can have it open til the end of the year you turn 71, you can invest your money for any purpose (but it's really meant for retirement), and you can use the Home Buyer's Plan but you're limited to borrowing $35K from the account and have to pay it back.

[@continentalmasters5432]

Wow thanks for the clarification

[@jessicamoorhouse]

@@continentalmasters5432 You're welcome!

[@alicendanyuzwe3617]

Please slow down for us newcomers. U have wonderful materials but you speak too fast.

[@jessicamoorhouse]

Ya, I'm not changing the speed at which I speak but guess what, you can change the playback speed in the settings if you need to.

[@sandeshdhuri2910]

Canadian prefer to speak French

[@arsnotorious]

No we don't... we can, but we do not.

[@jessicamoorhouse]

Most random comment? I actually know French btw.