Maximizing Your First Home Savings Account: Don’t Miss Out!!
Understanding The Guidelines & Benefits Of FHSA Accounts
Tips and Guidelines for Home Purchasers
Buying a home is an exciting milestone in every person’s life, but it can also be one of the most significant financial investments you’ll ever make. Luckily, the Canadian government has set up several programs to help you save up for your first home, and one such option is the First Home Savings Account (FHSA).
But before you start contributing to your FHSA, it’s crucial to understand some tips and guidelines to ensure you get the most out of this account. In this blog post, we will delve into some FAQs about FHSAs and provide you with practical suggestions to maximize your savings.
What counts as a ‘home’ for FHSAs?
The definition of a "home" is crucial with FHSAs. You cannot open an FHSA or make a tax-free withdrawal if you or your spouse have lived in a home you’ve previously owned in the last four calendar years. Additionally, tax-free withdrawals are allowed only when purchasing a qualifying home.
Can I open an FHSA if my spouse or common-law partner owns our home?
If you have a legally recognized union or common-law status, homeownership applies to both partners, regardless of whose name is on the deed. Hence, you can't open an FHSA if your spouse already owns the home. However, you may still contribute to an FHSA if you get married or become common-law, and its deadlines will remain unchanged.
Can I open an FHSA if I previously owned a home? What happens?
If you haven’t lived in a qualifying home by yourself or with your spouse or common-law partner in the previous four calendar years, you can open a new FHSA. Therefore, if you’ve previously owned a home but are presently renting, you qualify for an FHSA.
Can I still make a Home Buyer’s Plan (HBP) withdrawal from an RRSP if I use an FHSA?
Yes. While the initial legislation that introduced the FHSA suggested that you could only use one or the other, the final version of the legislation now enables you to withdraw tax-free funds from your FHSA and still qualify for an HBP withdrawal from your RRSP.
Buying your first home can be challenging, but with the government's help, you can make it more feasible by setting up a First Home Savings Account. By following the tips we’ve shared in this blog, you can ensure that you maximize your savings and qualify for tax-free withdrawals when purchasing your dream home.
Remember, always check the eligibility criteria and purchase requirements to ensure you’re on the right track to homeownership. With the FHSA, you'll be one step closer to turning your dream home into a reality!