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Excellent explanation and summary of the FHSA! Really solid trio of registered accounts offered to Canadians. With the recommendation of maximizing TFSA then RRSP (unless you're a high earner who will make less later), how does the FHSA fit into the picture? Would it go TFSA > FHSA > RRSP?
It depends on what your goals are for investing. While FHSA has great benefits, it can only be used towards a first home purchase (aside from the scenario where it’s collapsed into an RRSP if not used). TFSA can be used for a variety of goals, including a first home. You could choose to focus on both at once if you have multiple priorities (i.e. investing for a home and other long-term goals). If your #1 priority is to buy a home and you are in a higher tax bracket, focus on FHSA first.
Only residents of Canada can open a FHSA and the money must be used to buy a qualifying home that is located in Canada. If you are a US/Canada dual citizen, it would be best to get advice from a cross-border accountant on what the tax implications are of opening this account
Hi, thank you for detailed information. I want to open this acct this year and plan to buy home next year. In this situation I will be able to contribute only 16K. Will I be able to contribute my maximum limit in next five year for minimizing my loan amt or repay of mortgage?
Thanks for your question. The answer would be no; the FHSA is only intended to be used once for the purpose of making a qualifying withdrawal to help with a home purchase. Next year in 2024, if you withdraw your total contribution of $16,000 plus any investment growth, you must close the account after (no later than December 31, 2025) to avoid any unintended tax consequences. If you keep contributing to it, these contributions will not be tax-deductible. If there is any money left in the FHSA, it would need to be transferred out to an RRSP or withdrawn as taxable income by December 31, 2025.
Subscribe to our channel and click below to receive a free copy of It's Really Not Rocket Science by Tom Bradley (Canadian Investing Hall of Fame). share.hsforms.com/1Cz3wU9C5STOxRFPVRJPHlgctwbq
Excellent explanation - i will share with all the young ppl in my life - as well as newcomers to Canada.
I was looking for this one, thanks
Great presentation/summary of the FHSA. Thank you.
Thank you, glad it was helpful!
great explanation. i plan on helping my adult kids open FHSA's with Steadyhand!
Excellent explanation and summary of the FHSA! Really solid trio of registered accounts offered to Canadians.
With the recommendation of maximizing TFSA then RRSP (unless you're a high earner who will make less later), how does the FHSA fit into the picture? Would it go TFSA > FHSA > RRSP?
It depends on what your goals are for investing. While FHSA has great benefits, it can only be used towards a first home purchase (aside from the scenario where it’s collapsed into an RRSP if not used). TFSA can be used for a variety of goals, including a first home. You could choose to focus on both at once if you have multiple priorities (i.e. investing for a home and other long-term goals). If your #1 priority is to buy a home and you are in a higher tax bracket, focus on FHSA first.
@@SteadyhandInvestments Thanks!
Thanks @SteadyhandInvestments.
I'm assuming, like with TFSAs, the FHSA is not applicable /appropriate for those who also file in the US... 😞
Only residents of Canada can open a FHSA and the money must be used to buy a qualifying home that is located in Canada. If you are a US/Canada dual citizen, it would be best to get advice from a cross-border accountant on what the tax implications are of opening this account
Hi, thank you for detailed information.
I want to open this acct this year and plan to buy home next year. In this situation I will be able to contribute only 16K.
Will I be able to contribute my maximum limit in next five year for minimizing my loan amt or repay of mortgage?
Thanks for your question. The answer would be no; the FHSA is only intended to be used once for the purpose of making a qualifying withdrawal to help with a home purchase.
Next year in 2024, if you withdraw your total contribution of $16,000 plus any investment growth, you must close the account after (no later than December 31, 2025) to avoid any unintended tax consequences.
If you keep contributing to it, these contributions will not be tax-deductible. If there is any money left in the FHSA, it would need to be transferred out to an RRSP or withdrawn as taxable income by December 31, 2025.