Hard to say with 100% certainty. You could buy this year, and sell it next year. You’d then be a first-time homebuyer again in 4 years if you didn’t buy again. Lots of unknowns with this account. Potentially lots of loopholes.

Thanks for your quick replies Barry. So if you end up buying first home in less than 1 year and your contribute is only 8K (and growth value up now to say 9K at time of purchase)…. would you withdraw? If so, it’s game over for the plan, right? I would just keep contributing for another 4 years and not use this for my home purchase.

Jay,

Well, you’d still get the tax deduction so that puts some money back in your pocket right away.

I can see this being a huge pain for financial institutions to administer.

I don’t know if I see it as additional RRSP contribution room, but rather I view it as an account that I can invest up to $40,000 for 15 years. The hope is that I’ll be a first time buyer in that timeframe and hopefully withdraw my funds. If I don’t buy a home, or don’t qualify, I guess I’ll have to transfer it to my RRSP without penalty ;).

… I’m not complaining 🙂

Hey Jay,

That’s a question that many people are wondering as it hasn’t formally been addressed. Couldn’t anyone just use the account as an additional tax-free savings account and just wait 15 years before rolling it into their RRSP without penalty?

Do I have to withdraw for the home purchase or can I just leave the account as an investment account and continue to contribute another 4 years to take advantage of all 5-years (40K of tax-free contribution?)… And in 15 years move the entire balance to RRSP.

Thoughts?

Hey Vito,

Good to hear from you again.

So the FHSA is a bit tricky since nothing is official yet. The way I understand it is that if you make a withdrawal that’s not used for purchasing a home, then it would be similar to an RRSP withdrawal. That means it would count as income. The one year clock should not apply.

That said, we won’t know until everything is legislated.

Long time, I hope all is well with you, and happy new year!

I have a question in regards to a point your made, “once you’ve made a withdrawal to purchase a home, you need to close your FHSA within a year from the first withdrawal.”

If, for example, you withdraw $2k as in your example for any non-home buying reason, it makes sense that your annual income of the year of withdrawal would increase by $2k, however, does that mean you would still need to close the FHSA within a year from the first withdrawal?

I’m just thinking, let’s say something happens, and I need to access those funds but I still want to buy a home. If I had $30K in the account, the remaining $28K is still a decent down payment, but maybe I need to wait longer than 1 year to make my purchase.

In other words, once you withdraw any amount, does the clock (1 year) start ticking?

Thanks!

Hi David,

There’s conflicting information because the FHSA has not been legislated.

In reference to my line “Recently, the government has proposed that first-time buyers can use both the HBP and FHSA.” I pulled the information from here – https://www.advisor.ca/tax/tax-news/first-time-homebuyers-can-use-fhsa-and-hbp-feds-propose/

When it comes to transferring unused FHSA contributions, that’s still a bit of an unknown. From what we know now, you can transfer unused amounts to your RRSP without regards to any existing or lack of contribution room. This would be tax free.

Also, I had read that you can’t use both a FHSA and HBP together on a same home purchase. This contradicts to what you posted that “Recently, the government has proposed that first-time buyers can use both the HBP and FHSA.” I’d appreciate if you can look into it and revise/clarify. Thanks!