Simplified Explanation: Making Qualifying Withdrawals from Your FHSA

If you meet all the rules for a qualifying withdrawal, you can take money out of your First Home Savings Account (FHSA) tax-free even within the same year. You can withdraw everything at once or in smaller amounts over time.

• No waiting period: There’s no minimum time that your contributions or transfers need to stay in the account before you can make a qualifying withdrawal.
• No repayment required: You don’t have to pay back the money you withdraw.
• Joint purchases: If you’re buying or building a home with someone else, both of you can withdraw from your own FHSAs as long as you each meet the conditions.

Rules for a Qualifying Withdrawal

To make a tax-free withdrawal, these conditions must be met:

First-time homebuyer status:

• You must not have owned and lived in a qualifying home (or its equivalent outside Canada) in the current year or the past 4 years, except for the 30 days right before the withdrawal.

• *Note: This definition of “first-time homebuyer” is different from the one used to open an FHSA.

Home purchase agreement:

• You need a written agreement to buy or build a qualifying home. The home must be ready by October 1 of the year after your withdrawal.

Qualifying home definition:

A qualifying home is any housing unit in Canada, such as:

• Single-family homes, semi-detached homes, townhouses, mobile homes, condos, or apartments.
• A share in a co-op that gives you ownership and equity in a housing unit.

• Homes that don’t qualify include co-op shares that only give you tenancy rights (not ownership).

Residency and occupancy:

• You must be a Canadian resident when making the withdrawal and remain so until you buy the home or pass away.
• You must live in (or plan to live in) the home as your main residence within one year of purchase or construction.

Timing:

• You must not have bought the home more than 30 days before making the withdrawal.

Form submission:

If You Don’t Meet All Conditions

• If any condition isn’t met, your withdrawal will be taxed as income for that year.
• It’s your responsibility to ensure all rules are followed. If not, the Canada Revenue Agency (CRA) will reassess your taxes and include the withdrawal as taxable income.

Additional Notes

• You can use both the FHSA and the Home Buyers’ Plan (HBP) to withdraw funds for the same home if you meet all conditions for each program.
• Unlike the HBP, FHSA withdrawals cannot be canceled once made. If you put withdrawn money back into an FHSA, it will count as a new contribution.

Always double check:

Every effort has been made to “translate” accurately, but if you have any doubts or questions you can get clarifications from the Registered Plans Directorate by calling 1-800-267-3100 toll free, or Canada Revenue Agency’s Individual Tax Enquiries line at 1-800-959-8281

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