The deadline to contribute to a First Home Savings Account (FHSA) and get a deduction on your 2023 tax return is December 31, 2023.
We previously wrote about the details of the program below:
https://www.purtzki.com/justfordoctors/the-first-home-savings-account-fhsa-what-you-need-to-know/
Some planning tips to consider:
- The FHSA is only available to First Time Home Buyers. However, that definition also includes someone who previously bought a home but has not occupied a principal residence in the current or previous 4 calendar years.
- The $8,000 annual contribution room does not start until the account is open. Therefore even if one doesn’t intend to contribute in 2023 they should consider opening the account to start creating future room.
- You are permitted to transfer RRSP contributions into the FHSA however this does not create additional RRSP room.
- Consider having adult children (age 18 or more) open an account to start growing their contribution room. With the caveat that the account can only be open for 15 years. Therefore if an 18-year-old is unlikely to buy a property before age 34 then they should consider waiting to open the account.
- For those who don’t ever intend to purchase a principal residence, the account can still be opened and eventually rolled into an RRSP prior to the 15-year expiry. This effectively creates an additional $40,000 of RRSP room.
- For withdrawals from the FHSA to be tax-free the completion date of the property must be before October 1 of the year following the withdrawal. Therefore for pre-sale properties, care should be given to the withdrawal and completion date.
You must occupy the property within one year of completion to qualify for tax-free withdrawal.
