Overview
The First Home Savings Account (FHSA) is a Canadian registered plan designed to help first-time homebuyers save up to $40,000 for a home tax-free. RBC offers FHSAs with flexible investment options, digital tools, and professional advice.
FHSA Basics
- FHSA is a registered plan allowing tax-free savings for first-time homebuyers.
- Eligible if age 18+ (or age of majority), Canadian resident, and have not owned a home you lived in in current or previous four years.
- Contribute up to $8,000 annually, with a lifetime maximum of $40,000.
- Unused contribution room (up to $8,000) can be carried over to the next year.
- Investment earnings within FHSA are tax-free if used towards a qualifying home.
How the FHSA Works
- Open an FHSA with no minimum balance at RBC and access a range of investment products.
- Contribute regularly to maximize tax-free growth; automatic contributions are recommended.
- Withdraw funds tax-free to purchase a qualifying home; must meet government conditions.
- If unused after 15 years or by age 71, transfer funds tax-free to RRSP or RRIF, else withdrawals are taxed.
Investment Options & Access
- Hold savings deposits, stocks, bonds, ETFs, mutual funds, GICs, and cash in an FHSA.
- Open an account via RBC Direct Investing (self-directed) or RBC InvestEase (professionally managed portfolios).
- Access digital planning tools (MyAdvisor, NOMI Find & Save) and in-person or remote RBC advisors.
FHSA vs. Other Accounts
- FHSA can be used in conjunction with the Home Buyers’ Plan (HBP); HBP withdrawals require repayment, FHSA withdrawals do not.
- Compare FHSA benefits with TFSA and RRSP for optimized savings strategies.
FHSA Rules & Deadlines
- Must use FHSA funds by December 31 after the 15th anniversary of opening or by age 71.
- After making a qualifying withdrawal, close the account and distribute remaining funds by December 31 of the next year.
- Non-qualifying withdrawals are taxed and contribution room is not reinstated.
Frequently Asked Questions
- Eligibility, contribution limits, investment choices, tax implications, and withdrawal conditions are clarified in RBC’s FAQ section.
- Funds can be transferred tax-free between FHSA, RRSP, and RRIF, subject to conditions.
Action Items
- TBD – Interested Individuals: Assess FHSA eligibility and open an account via RBC Direct Investing or RBC InvestEase.
- TBD – Account Holders: Set up automatic contributions to maximize annual savings benefits.