FHSA calculator
This FSHA calculator is used to estimate the future value of your FHSA in addition to the total tax benefit – which includes taxes saved on the growth of investments and total tax benefits on contributions made to the account. If you want to calculate your total contribution room – check out our FHSA contribution room calculator.
What is a FHSA and how does it work?
A first home savings account (FHSA) is a special account in Canada that helps you save faster for the purchase of your first home – this is achieved through tax-free investment benefits as well as tax deductions on contributions made. You are able to earn tax-free interest within your FHSA up to a maximum of 15 years – which can then be withdrawn for the purchase of a home.
Where can I open a FHSA?
You can open multiple FHSA accounts in Canada through financial institutions participating in the program – options include banks, credit unions, trusts, or insurance companies.
You can open a FHSA at the following financial institutions:
- Wealthsimple
- Questrade
- RBC
- TD
- CIBC
- BMO
- Scotiabank
How much can I contribute to a FHSA?
The annual contribution limit for the FHSA is $8,000 – any unused contribution limit can be carried forward to future years up to a maximum of $8,000 (this means that the maximum contribution room at any point in time is $16,000). The maximum lifetime of a FHSA is 15 years, which starts the day you open the account – in which a total lifetime limit of $40,000 can be contributed to purchase your first home.
What Investments can I hold in a FHSA?
The FHSA requires that investments made are limited to qualifying investments – these qualifying investments are generally the same as the investments you can make to your tax-free savings account (TFSA) or registered retirement savings account (RRSP). This includes assets such as most stocks, options, bonds, exchange-traded funds (ETFs), guaranteed investment certificates, and mutual funds.. Some financial institutions may further limit the types of FHSA investments that they offer – an important note to know when looking for your FHSA issuer.
What is the difference between tax savings and tax deductions in the FHSA?
When you make Investments in a FHSA, they grow tax-free to help you achieve the objective of purchasing your first home faster. This tax-free growth refers to tax savings as you do not have to include these investment gains as income, allowing your investments to grow faster. When contributions are made to your FHSA, these contributions are tax-deductible and you can use the contributed amount to reduce your taxable income (in line with the contribution limits).
Who is eligible to open a FHSA?
You must meet the required residency, age and first-time home buyer conditions to open a first home savings account. You must be a resident of Canada to meet the residency requirement to open a FHSA – this requirement also applies to be able to make a qualifying withdrawal. You must be at least 18 years old (or 19 years old in certain provinces and territories) while younger than 71 as of December 31st in the year the FHSA is opened. You must also be considered a first-time homebuyer – which means you and your spouse did not live in a home you owned in the last four years.
FHSA vs. TFSA
Since TFSA withdrawals can be made tax-free, contributions can be withdrawn for a multitude of purposes, this includes to help with the downpayment of a house. However, contributions made to a TFSA are not tax-deductible and are made with after tax income – this is different from FHSA contributions which are tax-deductible. When comparing the annual contribution limit, the tax-free savings account’s contribution limit is indexed to inflation – while the FHSA’s annual limit has been set at $8,000. Both accounts allow for unused contribution room to be carried forward. The TFSA allows all used contribution room to be carried forward, while the FHSA limits the maximum unused carryforward amount to $8,000. While lifetime contributions for the FHSA are fixed at $40,000, lifetime contributions for the TFSA continue to increase for each year you are eligible to participate in the TFSA.
FHSA vs. RRSP (HBP)
The primary purpose of the FHSA is to save for a downpayment on a house. While a RRP’s primary objective is not to save for the purchase of a first-home, it can help with providing a downpayment through a home buyer plan (HBP) withdrawal. Both the FHSA and an RRSP allow for tax to be deducted on contributions made to the account. When comparing the annual contribution limit of these two accounts, a FHSA has a flat limit of $8,000 compared to the RRSp’s limit which is based on your personal income (up to a maximum amount). Both accounts allow unused contribution room to be carried forward – however, the FHSA is limited to a maximum carryforward of $8,000. While the lifetime contribution limit for the FHSA is $40,000 the RRSP’s contribution limit is based on your personal income.
Legal Disclaimer
This calculation is for illustrative purposes only and should not be relied upon as specific financial advice. You should speak with a professional before making any final decisions to ensure that your financial needs have been properly taken into account.