The FHSA clock.

Who can open one

CRA lists the conditions. You must be:

• 18 or older, and 71 or younger on December 31 of the year you open it.
• A resident of Canada.
• A first-time home buyer. That means that this year and in the previous four calendar years, you haven't lived in a home that you owned as your main residence, or in one that your current spouse or common-law partner owned.

How the room builds

• The year you open your first FHSA, your room is $8,000.
• Unused room carries forward, up to a maximum of $8,000. So the most you can ever contribute in one year is $16,000.
• The lifetime limit is $40,000.
• Go over and CRA charges 1% a month on the highest excess amount, the same as a TFSA.

Room doesn't build before the account exists. That's why many people open one before they're ready to fund it.

The deduction

• Contributions are deductible for the year you make them, or a later year. You can wait and claim the deduction when your income is higher.
• There is no "first 60 days" rule. A contribution in February counts for that year, not the one before.
• Moving money in from your RRSP is allowed, but it isn't deductible a second time.

A qualifying withdrawal

To take the money out tax-free, all of CRA's conditions must be met. The main ones:

• You're a first-time home buyer at the time (the test ignores the 30 days just before the withdrawal).
• You have a written agreement to buy or build a qualifying home, with completion before October 1 of the following year.
• The home is in Canada.
• You intend to live in it as your main residence within one year of buying or building it.
• You're a resident of Canada from the withdrawal until you acquire the home.
• You didn't acquire the home more than 30 days before the withdrawal.

Read those conditions and two common questions answer themselves. A rental property you won't live in doesn't meet the main-residence condition. And the agreement has to be to buy or build a home, so check with CRA before counting on the account for land alone.

The 15-year clock

Your FHSA must be closed by December 31 of the year in which the earliest of these happens:

• the 15th anniversary of opening your first FHSA
• you turn 71
• the year after your first qualifying withdrawal

If you never buy

The money isn't lost. You can transfer it directly to your RRSP or RRIF with no tax at that point, and it doesn't use up your RRSP room. Or you can withdraw it as taxable income. If you do neither by the deadline, the full value is added to your income for that year.

Your progress is saved on this device only. No account needed.