What is an FHSA account?

Owning a home is a cornerstone of the Canadian dream, but for many in our community, the path to homeownership feels increasingly difficult. Between rising property prices and the search for financing that aligns with Shariah principles, the hurdles can feel high.

However, a relatively new account type from the Canadian government—the First Home Savings Account (FHSA)—is a game-changer for those looking to save for their first down payment. At Manzil, we believe in empowering you with the best financial tools while ensuring they remain 100% Halal.

Here is everything you need to know about the FHSA and how it can help you get closer to your first Halal home.

What is a First Home Savings Account (FHSA)?

Launched in 2023, the FHSA is a registered savings account designed specifically to help Canadians save for their first home. Think of it as a "hybrid" account: it combines the best tax-saving features of a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA).

• Like an RRSP: Your contributions are tax-deductible, meaning they reduce your taxable income for the year.
• Like a TFSA: Any growth on your investments and your eventual withdrawal for a home purchase are completely tax-free.

The Key Benefits

1. Tax-Free Growth: Every dollar you earn through Shariah-compliant investments within the account stays in your pocket.
2. No Repayment Required: Unlike the RRSP Home Buyers’ Plan (HBP), which requires you to pay back the borrowed funds over 15 years, the money you take out of an FHSA for a home is yours to keep.
3. Flexibility: If you don't end up buying a home within 15 years, you can transfer the funds into an RRSP or RRIF without affecting your existing contribution room.

How Much Can I Contribute?

You can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. If you don’t hit the full $8,000 in one year, you can carry forward up to $8,000 of unused room to the following year.

Who is Eligible?

To open an FHSA, you must:

• Be a Canadian resident.
• Be at least 18 years old.
• Be a first-time homebuyer (meaning you or your spouse/common-law partner haven’t owned a home that you lived in as a principal residence in the current year or the previous four calendar years).

Making it Halal: The Manzil Way

It is important to remember that an FHSA is simply a "tax bucket" or a shell. Whether it is Halal or not depends entirely on what you put inside it. Traditional banks often place FHSA funds into interest-bearing GICs or non-compliant mutual funds. At Manzil, we ensure your FHSA stays pure. By opening a Halal FHSA through our platform, your contributions are invested into Halal Portfolios, which are:

• AAOIFI Compliant: Rigorously screened to ensure no involvement with Riba (interest), gambling, alcohol, or other prohibited industries.
• Ethically Managed: Focused on diversified, Shariah-certified assets that align with your values.

Can I Use the FHSA with Other Accounts?

Absolutely. You can combine your FHSA with your TFSA savings and even the RRSP Home Buyers’ Plan (which currently allows you to withdraw up to $60,000). For a couple buying their first home together, this means you could potentially have over $100,000 in tax-advantaged savings to put toward a down payment.

Start Your Journey Today

The clock on your 15-year FHSA window starts as soon as you open the account. Even if you aren't ready to buy next year, starting today allows your Halal investments to benefit from the power of compounding.