If you use your FHSA savings to buy a home, a withdrawal from your FHSA will not be taxable. To qualify, your withdrawal must meet the following conditions:
- You must be a first-time homebuyer;
- You must be a Canadian resident;
- You must have a written agreement to buy or build a qualifying home (located in Canada) before October 1 of the year following the year of withdrawal; and
- Your new home must be your principal place of residence within one year of buying/building it.
Once you’ve made a non-taxable withdrawal from your FHSA to purchase a home, you must close your FHSA within a year from that date, and would not be eligible to open another FHSA.
If you take funds from your FHSA as a non-qualifying withdrawal, you must include the amount in income for the year of the withdrawal and tax will be withheld (much like a withdrawal from your RRSP).