The First Home Savings Account (FHSA) is a tax-advantaged savings account in Canada designed to help individuals save for the purchase of their first home. It combines the benefits of both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA) by allowing contributions to be tax-deductible (like an RRSP), while withdrawals for a first home purchase are tax-free (like a TFSA).

Key Features of the FHSA:

• Tax-Deductible Contributions: Contributions to an FHSA can be deducted from your taxable income, helping reduce your tax liability.
• Tax-Free Withdrawals: When the funds are used to purchase your first home, withdrawals (including investment growth) are tax-free.
• Annual Contribution Limit: You can contribute up to $8,000 per year, with a lifetime limit of $40,000. Unused contribution room can be carried forward to future years, up to a maximum of $8,000 per year.
• Eligibility: You must be a Canadian resident, at least 18 years old, and a first-time homebuyer (meaning you haven’t owned a home in the current or previous four calendar years).
• Investment Options: You can hold a variety of investments in your FHSA, including cash, stocks, bonds, mutual funds, and ETFs.

The FHSA is a valuable tool for first-time homebuyers, offering a combination of tax savings and flexibility to help them save for their first home.