The Tax-Free First Home Savings Account (FHSA) presents an exciting opportunity for couples to save for their first home. By understanding the nuances of spousal eligibility and contributions, you and your partner can leverage your accounts to maximize savings.
Understanding FHSA Eligibility for Couples
Each member of a couple, whether married or in a common-law relationship, can open an FHSA if they meet the first-time homebuyer criteria. However, this status is influenced by both partners’ property ownership within the last four years. For example, if one partner owns a home and the other has been living there, neither would qualify as a first-time homebuyer and cannot open an FHSA.
However, once opened, an FHSA holder may still make tax-free withdrawals for purchasing a home, even if their spouse owns the home in which they currently reside. This nuance allows greater flexibility as couples prepare for homeownership together.
Contribution Rules and Spousal Gifting
Each FHSA holder is responsible for contributing to their own account. However, spouses can gift funds to each other for FHSA contributions without triggering tax attribution rules. This means that while the contribution must come from the FHSA holder's account, couples can share financial resources to maximize contribution room.
FHSA as a Beneficiary Asset for Spouses
Spouses can be designated as FHSA beneficiaries or successor holders. In the event of the account holder’s death, the surviving spouse can take over the FHSA or transfer its proceeds to an RRSP or RRIF without tax penalties. This designation can help preserve the tax advantages of the FHSA, ensuring seamless estate planning for couples aiming to leave their spouse in a strong financial position.
With careful planning, couples can work together to make the most of the FHSA, securing both immediate and long-term financial benefits as they build toward homeownership.
