Opened a First Home Savings Account? Here's what you should know when filing your taxes
If you opened a First Home Savings Account (FHSA) last year and are wondering how that’ll affect your taxes this year, the Canada Revenue Agency (CRA) has some answers.
The FHSA was launched in April 2023 and aims to help Canadians save for a down payment to buy their first home amid soaring housing prices.
It allows prospective first-time homebuyers to contribute up to $8,000 per year (up to a lifetime limit of $40,000) for their first down payment.
The federal government says 150,000 Canadians opened a tax-free FHSA as of October 2023.
Here’s what you should know about the FHSA when filing your taxes, according to the CRA.
š” If you opened a First Home Savings Account in 2023, here are 10 things you need to know š https://t.co/KCWIZb3P5d #CdnTax pic.twitter.com/r7arl2M9bP
ā Canada Revenue Agency (@CanRevAgency) March 6, 2024
Are FHSA contributions tax deductible?
The CRA says that up to $8,000 in FHSA contributions made by December 31, 2023, can be claimed as a deduction on your 2023 income tax return.
“Contributions made to your FHSA are generally tax deductible, while transfers from your RRSPs to your FHSAs are not tax deductible,” explained the agency.
If you opened more than one account, the total amount contributed or transferred to all of them should not exceed the annual and lifetime limits.
The CRA adds that qualifying withdrawals, including investment income earned in the account on contributions and transfers, are non-taxable when withdrawn to build or buy a qualifying home.
How do you file your taxes to include your FHSA contribution?
According to the CRA, you’ll need to fill out this form to let it know that you opened an account. You should fill it out even if you didn’t contribute to your FHSA in 2023.
The financial institution you opened an account with will issue you a T4FHSA First Home Savings Account Statement, showing the totals of certain transactions you made in your account last year.
Your FHSA participation details can be accessed through the CRA My Account. You can also view and print a copy of your T4FHSA slip there.
What about unused contributions?
The CRA says that contributions that aren’t deducted in the year they’re made can generally be carried forward for future tax years.
What happens after you get your tax return?
According to the CRA, once your 2023 tax return has been assessed, you will also receive an FHSA participation room statement with your notice of assessment or on a T1028.