FAQ – Savings and investment – FHSA

Yes. A 1% tax on over-contributions to an FHSA would apply each month. You can eliminate this penalty by removing the excess amount. Otherwise, the over-contributed amount is deducted from the following year's contribution limit.

Yes. Your FHSA must be closed on December 31 of the year you turn 71 or on the 15th anniversary of the opening of your first FHSA. You can choose one of the following options:

- Transfer your accumulated funds to a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF), depending on your age, without affecting your RRSP contribution room and without paying tax in the year of the transfer.
- Withdraw accumulated funds and pay the tax on that amount.

Yes. If you don't exceed your FHSA contribution room, you can transfer your RRSP amount to your FHSA. However, you won't get your contribution room back for the amount transferred from your RRSP or receive another tax deduction.

No. You can't directly contribute to another person's FHSA. However, you can personally provide funds to your child or spouse so that they can contribute to their FHSA.

In all cases, only the FHSA's holder can claim tax deductions for contributions made. In addition, investment income earned in the FHSA will not be attributed to the person who gave money to the account holder.

No. You're not required to deduct contributions in the year that your contributions are made. This means that contributions you make during a low-income year could be used to reduce your taxable income in a future year when you fall under a higher tax bracket.

For example, a student who works part-time can contribute $1,000 to their FHSA but wait until they have a well-paid job after they graduate before applying the corresponding deduction. You could then get a more advantageous tax savings.

Yes. The funds accumulated by each future owner can be pooled to buy a first qualifying home together.

Yes. Depending on your investment strategy and resulting gains, you can end up withdrawing more money than your total contributions if you earned a good return. Also, any investment income generated in your account is tax-free.

It is a housing unit located in Canada or share in a co-operative housing corporation that entitles you to own a housing unit located in Canada. It can be an existing home or one under construction. Single-family homes, semi-detached homes, townhouses, mobile homes, condos, and apartments in a duplex, triplex, fourplex or apartment building all qualify.

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