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    • Wealthsimple FHSA: Tax-Free Savings for Your First Home

    The First Home Savings Account (FHSA) is an innovative tax-free savings account designed to help Canadians save for their first home purchase. Launched in 2023, this account has gained popularity among various financial institutions, including Questrade, Wealthsimple, TD, and RBC, all working to offer it to their clients.

    Wealth simple FHSA Accounts

    Wealth simple is now providing Canadians with the opportunity to open FHSA accounts, offering both managed (robo-advisor) and self-directed (brokerage) options. To get started, simply visit their website and begin the application process.

    Requirements for Wealthsimple FHSA

    To be eligible for a Wealthsimple FHSA, you must meet the following criteria:

    1. Be a resident of Canada.
    2. Be at least 18 years old, but no older than 71 years.
    3. Be a first-time home buyer, as defined by the Canada Revenue Agency (CRA). This means you have not owned a home in the calendar year you opened an FHSA or in the preceding four calendar years.

    Wealth simple FHSA Investment Options

    Wealthsimple FHSA accounts offer a range of investment assets, including:

    • Stocks
    • Exchange-traded funds (ETFs)
    • Bonds
    • Cash (savings)

    Comparing Wealth simple FHSA with TFSA and RRSP

    Here’s a comparison of the FHSA, Tax-Free Savings Account (TFSA), and Registered Retirement Savings Plan (RRSP):
    AspectFHSARRSPTFSA
    Contribution Limit$8,000 per year, $40,000 total18% of earned income in the previous year, up to a limit ($30,780 in 2023)$6,500 in 2023 ($88,000 total since 2009)
    Over-contribution Penalty1% monthly on excess contributions1% monthly on excess contributions over $2,000 lifetime buffer1% monthly on excess contributions
    WithdrawalsTax-free for home purchaseTaxable on withdrawalTax-free
    Account ExpirationAfter 15 yearsConvert at age 71Does not expire
    Tax-free GainsYesTax-deferredYes
    Contributions Tax DeductibleYesYesNo
    Permissible InvestmentsSavings deposits, stocks, ETFs, mutual funds, options, bonds, GICsSavings deposits, stocks, ETFs, mutual funds, options, bonds, GICsSavings deposits, stocks, ETFs, mutual funds, options, bonds, GICs

    FHSA vs. Home Buyer’s Plan (HBP)

    The Home Buyer’s Plan (HBP) is another option for Canadians looking to buy their first home. Here’s a comparison between FHSA and HBP:
    • FHSA allows you to contribute up to $40,000 without the need for repayment after withdrawal, whereas HBP permits borrowing up to $35,000 from your RRSP, which must be repaid within 15 years.
    • Couples can withdraw up to $70,000 ($35,000 x 2) using the HBP.
    • You have the flexibility to use both the HBP and FHSA when purchasing your first home in Canada.
    Wealthsimple FHSA

    Frequently Asked Questions (FAQs)

    1. Is FHSA available on Wealth simple?

    Yes, Wealthsimple offers managed and self-directed FHSA accounts.

    2. Which banks offer the FHSA?

    RBC and National Bank currently offer the FHSA, while CIBC and TD plan to provide it in 2023.

    3. Can I open an FHSA if I already own a home?

    No, you cannot open an FHSA if you have a 10% ownership stake or higher in your current home.

    4. What is the downside of the FHSA?

    One limitation is that it only allows a maximum contribution of $40,000, which may not cover the minimum down payment for many Canadian homes.

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