Basics
What is an FHSA and how does it work?
A First Home Savings Account (FHSA) is a registered savings plan that helps eligible first-time home buyers in Canada save for a first home. It combines two tax advantages: contributions are tax-deductible, like a Registered Retirement Savings Plan (RRSP), and qualifying withdrawals to buy a first home are tax-free, like a Tax-Free Savings Account (TFSA). Investment growth inside the account is not taxed.
Who is eligible to open an FHSA?
To open an FHSA you must be a Canadian resident, at least 18 years of age (and no younger than the age of majority in your province or territory), and a first-time home buyer. You qualify as a first-time home buyer if you — or your spouse or common-law partner — did not own and live in a home you owned in the current calendar year or any of the 4 preceding calendar years.
What is the FHSA contribution limit this year, and what is the lifetime maximum?
The annual contribution limit is $8,000 and the lifetime contribution limit is $40,000. You can hold more than one FHSA, but these limits apply across all of your accounts combined.
Rules and limits
How does FHSA carry-forward work if I don't contribute the full amount in a year?
If you contribute less than $8,000 in a year, the unused amount carries forward to the following year. Carry-forward room only starts building once you have opened an FHSA — it does not accumulate in years before your account exists.
Does unused FHSA room carry forward indefinitely, or is there a cap?
Carry-forward is capped at $8,000. That means the most you can carry into any single year is $8,000, so your maximum possible contribution in one year is $16,000 — the $8,000 annual limit plus up to $8,000 of carried-forward room.
Do RRSP-to-FHSA transfers count against my annual contribution limit?
Yes. Transfers from an RRSP to an FHSA share the same $8,000 annual room and $40,000 lifetime limit as direct contributions. Unlike direct contributions, RRSP-to-FHSA transfers are not tax-deductible because you already received a deduction when the money went into the RRSP.
What happens if I over-contribute to my FHSA?
An over-contribution is subject to a tax of 1% per month on the highest excess amount in your account for each month the excess remains. To stop the penalty, withdraw or transfer out the excess amount. Your excess FHSA amount will be reduced or eliminated when your new yearly contribution room comes into effect January 1 the following year.
Tax treatment
Are FHSA contributions tax-deductible?
Yes. Direct contributions are generally tax-deductible and reduce your taxable income, similar to RRSP contributions. You can claim the deduction in the year you contribute or carry it forward to a later year. Transfers from an RRSP are not deductible.
Are FHSA withdrawals taxed if used for a qualifying home purchase?
No. A qualifying withdrawal used to buy or build a first home is tax-free, and you can withdraw as much as or as little of the property in your FHSA for a qualifying purchase. Withdrawals that are not qualifying are added to your income and taxed.
What tax slip do I need for my FHSA contributions when filing?
Your FHSA issuer will send you a T4FHSA slip (First Home Savings Account Statement) showing your contributions, transfers, and withdrawals for the year. You report these amounts on Schedule 15 (FHSA Contributions, Transfers and Activities) when you file your income tax and benefit return.
Comparisons
FHSA vs. the RRSP Home Buyers' Plan: which should I use first?
The FHSA is often used first because a qualifying withdrawal is tax-free and never has to be repaid. The RRSP Home Buyers' Plan (HBP) lets you withdraw from your RRSP for a first home, but that amount must be repaid to your RRSP over 15 years or it is added to your income. Which option fits depends on how much you have saved in each account and your repayment comfort.
Can I use both the FHSA and the RRSP Home Buyers' Plan for the same home purchase?
Yes. You can combine an FHSA qualifying withdrawal with an HBP withdrawal for the same home purchase, which can increase your total down payment.
FHSA vs. TFSA: which is a stronger choice for saving toward a first home?
For a first home specifically, the FHSA offers an advantage the TFSA does not: contributions are tax-deductible while qualifying withdrawals remain tax-free. A TFSA also allows tax-free withdrawals and can be used for any goal, but its contributions are not deductible. Many first-time buyers prioritize the FHSA for its deduction, then use a TFSA for savings beyond the FHSA limits.
Can both spouses each open an FHSA and combine the room for one home purchase?
Yes. If both partners are eligible, each can open their own FHSA and contribute up to their own $40,000 lifetime limit. Combined, a couple can put up to $80,000 (plus growth) toward the same first home.
Account lifecycle
What counts as a "qualifying" first-home withdrawal from an FHSA?
A qualifying withdrawal is tax-free and requires that you:
are a first-time home buyer and a Canadian resident (you did not live in a qualifying home that you owned or jointly owned at any time in the current calendar year before the withdrawal, or the previous four years)
Are a Canadian resident from the time you make your first qualifying withdrawal
have a written agreement to buy or build a qualifying home in Canada before October 1 of the year following the date of withdrawal
intend to occupy it as your principal residence within 1 year of buying or building it
Are purchasing a: single-family, semi-detached, mobile, or town home; condo or apartment in a duplex, triplex, fourplex, or apartment building; co-operative housing unit that gives you equity interest
haven’t acquired a qualifying home 30 days or more before making the withdrawal
What happens to the FHSA if I don't buy a home within the participation period?
Your FHSA has a maximum participation period that ends after 15 years or by the end of the year you turn 71, whichever comes first. If you have not bought a home by then, you can transfer the funds tax-free to an RRSP or a Registered Retirement Income Fund (RRIF), where the money stays tax-sheltered. Your FHSA participation also ends December 31 of the year following your first qualified withdrawal. Alternatively, you can withdraw the funds, but a non-qualifying withdrawal is taxable.
Does closing an FHSA after a qualifying withdrawal restore that contribution room?
No. Unlike a TFSA, an FHSA does not restore contribution room after a withdrawal. Once you make a qualifying withdrawal and close the account, that room does not come back.
