The First Home Savings Account can be one of the most useful tools for eligible first-time buyers because it combines a tax deduction on qualifying contributions with tax-free qualifying withdrawals for a first home.
The First Home Savings Account can be one of the most useful tools for eligible first-time buyers because it combines a tax deduction on qualifying contributions with tax-free qualifying withdrawals for a first home.
How the FHSA works
An FHSA can allow an eligible first-time buyer to contribute up to $8,000 of participation room in the first year the account is opened, with qualifying withdrawals for a first home generally tax-free.
Why opening the account early can matter
FHSA participation room begins when you open an account, not simply because you are eligible. Buyers who expect to purchase in the next few years may benefit from learning the rules before they are ready to make an offer.
Using the FHSA for your Ottawa purchase
A qualifying withdrawal can be applied toward your down payment or other purchase-related needs, provided the CRA requirements are met.
FHSA plus the Home Buyers' Plan
The Home Buyers' Plan currently allows eligible buyers to withdraw up to $60,000 from an RRSP for a qualifying home. A qualifying FHSA withdrawal and an HBP withdrawal can be used for the same home if the program conditions are met.
Coordinate the timing
Talk with your financial institution, mortgage professional and tax adviser before closing so withdrawal forms and timing do not create last-minute issues.
A practical next step
A local Ottawa real estate agent can help you turn your budget into a realistic search plan, explain neighbourhood trade-offs and coordinate the buying process with your lender and lawyer.