FHSA deadline: What to know and what to do
More than 300,000 Canadians have opened a First Home Savings Account (FHSA) since the program began back in April, according to federal figures shared Tuesday.
The accounts allow first-time homebuyers to contribute up to $8,000 annually to help with a down payment, to a total limit of $40,000.
The banking options offers some tax benefits from a Registered Retirement Savings Plan and from a Tax-Free Savings Account, the government said.
"A key focus of our economic plan is making housing more affordable for Canadians,” Chrystia Freeland, deputy prime minister and finance minister, said in a news release.
“The new Tax-Free First Home Savings Account is an important part of our plan—and it is putting home ownership back within reach for more Canadians every single day.
Contributions must be completed by the end of the year to count against 2023 tax filings – and the vice president of savings at TD Bank said people should aim to meet the Dec. 31 deadline.
“It’s really important then that any prospective first-time home buyer goes and opens that account by Dec. 31, that way they can activate that contribution,” Pat Giles told BNN Bloomberg in an interview.
Most big Canadian banks started offering the banking option partway through 2023 and have reported strong demand for the accounts since then, particularly among younger Canadians.
CIBC and BMO became the last of Canada’s big six banks to start offering the FHSA last month, following launches at Scotiabank and TD in August and National Bank and RBC in April.
Tuesday’s numbers from Ottawa shed light on the level of demand across the country.
Financial services provider Wealthsimple, which started offering the accounts in August, said on Tuesday that it opened 100,000 FHSAs this year, accounting for about a third of all accounts in Canada.
Giles said TD has opened “tens of thousands” of accounts since rolling out the program a few months ago, with 60 per cent of account holders under the age of 30.
“What Canadians love about this product is it has the benefits of an RRSP on the way in because the contributions are tax deductible and then it’s like a TFSA on the way out, because as long as you’re pulling that money out for the purposes of buying a home,” he said. “All of that growth is tax free.”