TAX-FREE FIRST HOME SAVINGS ACCOUNT
The Tax-Free First Home Savings Account (FHSA) will be introduced to help people save for their first home. Like RRSPs, contributions to an FHSA will be deductible and income will accrue in the plan tax-free. Qualifying withdrawals to purchase a first home will be non-taxable. Unlike the RRSP Home Buyers’ Plan, they will not have to be paid back. There will be an annual contribution limit of $8,000 and a lifetime limit of $40,000. Unused annual contribution room will not be carried forward.
The Home Buyers’ Plan will continue in effect under the existing rules. However, taxpayers will not be permitted to make both an FHSA withdrawal and an HBP withdrawal in respect of the same qualifying home purchase.