Ready to Buy? Making a Tax-Free Withdrawal from Your FHSA (Part 5/5)
- Natesh Pillai
- Aug 8
- 1 min read
The ultimate goal of your First Home Savings Account (FHSA) is to help you buy your first home! The great news is that when it's time to use your savings for a qualifying home, the withdrawal process is designed to be tax-free.
The Power of a "Qualifying Withdrawal": When you withdraw funds from your FHSA to purchase your first qualifying home, these withdrawals are not taxed. This means every dollar you've saved and grown in your FHSA can go directly towards your down payment, closing costs, or other home purchase expenses, without you having to pay income tax on it.
What's a "Qualifying Home"? Generally, a qualifying home is a housing unit located in Canada that you intend to occupy as your primary residence within one year after buying or building it. There are specific criteria the CRA looks for, but it's designed for genuine first-time home purchases.
Important Note on Excess Amounts: Just a reminder from our previous post: if you made an "excess contribution" (over-participated) and then withdrew that excess amount without properly designating it, that specific excess withdrawal would be taxable. But for amounts within your limits, withdrawals for a qualifying home are truly tax-free!
The FHSA truly helps you maximize your savings for your homeownership dream by letting you keep all your hard-earned money and its growth.
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