FHSA Guide: Making a Withdrawal From Your Account

So far we have learned two things about the First Home Savings Account (FHSA). Number one, is what exactly the account is. The second thing we learned was about opening an FHSA if you want to get a head start on saving before you start searching for houses for sale in Windsor. What about when it comes time to use that money for a Windsor home for sale? We’ll cover withdrawals here today.

If you want to avoid the income tax consequences of a withdrawal, it must be one of the three following types of withdrawal:

a qualifying withdrawal
a designated amount
an amount otherwise included in your income

Outside of these, the amount withdrawn from your FHSA is considered taxable and therefore must be included as income when you file income tax. It is important to note however that if you transfer property directly from your FHSA to another FHSA, a registered retirement saving plan (RRSP) , or a registered retirement income fund (RRIF) , this is considered a “transfer” and not a “withdrawal” for taxation purposes.

Let's focus on a Qualifying Withdrawal today. If you meet the conditions below, you can withdraw all of the property from your FHSAs tax-free. This can be done in one lump sum or over the course of multiple withdrawals. The conditions set out by the CRA are:

You must fill out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and give it to your FHSA issuer
You must be a first-time home buyer
You must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal
You must not have acquired the qualifying home more than 30 days before making the withdrawal
You must be a resident of Canada from the time that you make your first qualifying withdrawal from one of your FHSAs until the earlier of the acquisition of the qualifying home, or the date of your death
You must occupy or intend to occupy the qualifying home as your principal place of residence within one year after buying or building it

As long as you meet these conditions, you are not required to include this in income tax and benefit return.

Here at Jump Realty our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, LaSalle, Harrow, Chatham, and Leamington, no matter where you are, a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!