FHSA | Frequently Asked Questions FAQs
Learn about the FHSA Frequently Asked Questions
Can you fund the FHSA with the full $40,000 in one deposit?
No, you cannot fund the FHSA with the full $40,000 in one deposit. The annual contribution limit is $8,000 in the year you open your first FHSA. If the account was opened in 2023 and no contributions were made, you could contribute $16,000 in 2024, which includes the current year's contribution limit and the maximum carryforward.
How can spouses/common-law partners work together to maximize the FHSA?
As long as both partners are qualifying individuals and first-time homebuyers, they can each contribute to their own FHSA and use the funds to purchase the same home. This allows couples to work together to maximize their savings for a future home purchase.
Can a gain or loss be claimed when contributing in-kind from a non-registered account to an FHSA?
No, gains or losses cannot be claimed. If the contribution is made in-kind, the deemed disposition of the property in the non-registered account is at fair market value (FMV), which may trigger a capital gain that must be reported. However, if the in-kind contribution results in a loss, it cannot be claimed.
Do clients receive contribution receipts similar to RRSP contributions?
Yes, but the FHSA tax slip (T4FHSA/RL-32 for Quebec residents) reports all account transactions, including contributions, transfers, and withdrawals. The format may differ from RRSP contribution receipts.
Can contributions be made from individual or joint non-registered cash accounts?
Yes, contributions can be made from the account holder's individual or joint non-registered cash account.
For a non-qualifying withdrawal, will tax be withheld at source? Is the rate the same as for an RRSP withdrawal?
Yes, tax will be withheld at source for non-qualifying withdrawals, and the withholding rates are the same as those for other registered accounts, including RRSPs.
Do clients receive withdrawal receipts for both qualifying and non-qualifying withdrawals?
Yes, the FHSA tax slip (T4FHSA/RL-32 for Quebec residents) reports all transactions, including contributions, transfers, and withdrawals. If a client makes both a qualifying and a non-qualifying withdrawal in the same year, both withdrawals will appear on the same tax slip.
Is an “agreement to buy a home” required when submitting a request for a qualifying withdrawal?
No, only a duly completed RC725 form (Request to Make a Qualifying Withdrawal from Your FHSA) is required.
Can a client make a qualifying withdrawal for a down payment on a pre-build project that takes longer than one year to complete?
No, the client must meet all the conditions for a qualifying withdrawal, including:
- Having a written agreement to buy or build a qualifying home with the acquisition or construction completion date before October 1st of the year following the date of withdrawal.
- Occupying or intending to occupy the home as their principal residence within one year of buying or building it.
However, if the client met the written agreement condition before October 1 but was unable to meet the occupancy requirement due to extended construction timelines, the withdrawal is still valid.
Can you transfer money from a TFSA to an FHSA?
Yes, but the process requires making a withdrawal from the TFSA to a non-registered account and then contributing the funds from the non-registered account to the FHSA.
What happens to the growth of assets if the client withdraws funds from an FHSA and does not use the money for a home purchase?
If the funds are not used for a home purchase, the client can make a direct transfer from the FHSA to their RRSP. This transfer does not have immediate tax consequences, but the NBIN Registered Transfer Form must be completed.
If a qualifying individual’s living situation changes, must the FHSA be closed immediately?
No, the FHSA can remain open, and the client may continue contributing since they met the eligibility criteria when the account was opened. However, for withdrawals, the client must still meet the first-time homebuyer definition at the time of withdrawal.
What are the age requirements to open an FHSA?
An FHSA can be opened after the client turns 18 or 19, depending on their province of residence.
Can a client who becomes common-law with someone who previously bought a home still use the FHSA for a first-time home purchase?
No, the client is not considered a first-time homebuyer if they lived in a qualifying home with their spouse or common-law partner who previously owned the home. The CRA defines a first-time homebuyer as someone who did not, at any time in the current or preceding four calendar years, live in a home that they or their spouse/common-law partner owned.
Can a client who jointly owned a home with their spouse, but lived in a rental unit for four years after divorce, still open an FHSA?
Yes, if the client declared the rental unit as their principal place of residence immediately after moving in, they would meet the requirement of not having lived in a qualifying home for the preceding four years, making them eligible to open an FHSA.
Can an employer bonus be deposited directly into an FHSA without being taxed, like an RRSP bonus contribution?
Yes, an employer bonus can be contributed to an FHSA without being taxed, similar to an RRSP contribution. Employers are not considered third parties under FHSA rules, so the contribution can be deposited into a control account and then transferred into the FHSA. However, in-kind contributions are not allowed due to system limitations.
Does an FHSA contribution from an employer via wire transfer have to go through the client’s cash account?
No, the contribution does not need to go through the client’s cash account since the source of funds is the employer.