FHSA or HBP - Which one should you use?
Three differences you should know: ️
FHSA
- The Contribution Limit: Eligible Canadians upon first opening the FHSA have a contribution limit of $8,000 per year, and a lifetime maximum of $40,000
- The Carry Forward Rule: Unused FHSA contribution room can be carried forward up to $8,000
- Repayment: If using the FHSA to purchase a qualifying home, no repayment into the FHSA is required ️
HBP withdrawal from the RRSP
- The Contribution Limit: A formula is used to calculate your contribution limit using your previous year’s earned income. A maximum contribution limit is set each year.
- The Carry Forward Rule: Cumulatively, all unused contribution room can be carried forward up to the end of the calendar year you turn age 71
- Repayment: If using the HBP to purchase a qualifying home, funds withdrawn must be repaid to the RRSP within 15 years, based on a predetermined schedule
Tip: Provided you meet the eligibility requirements for each, you can use both the FHSA and the HBP
*To determine if you are eligible, inquire with the Government ofCanada.