FHSA: First home savings account
An FHSA allows prospective qualifying first-time home buyers to save up to $40,000 tax-free.
$8,000
Annual contribution limit
$40,000
Lifetime contribution limit
15 years
Lifespan of an FHSA
Basic rules to remember about FHSAs
Eligibility
- An individual and a resident of Canada
- Between the ages of 18 and 71
- A “first-time home buyer”: you (or your partner) did not own your principal place of residence in the year before the account was opened or at any time in the preceding four years.
Contributions
$8,000
Annual contribution limit
$40,000
Lifetime contribution limit
The annual contribution limit will apply to contributions made during a calendar year (January 1 to December 31).
Carry forward
The unused contribution room can be carried forward, up to a maximum of $8,000.
For example, if your FHSA was opened in 2024, but you only contributed $4,000 (half of the annual maximum allowed), you will be able to contribute up to $12,000 in 2025. If you do not contribute anything in 2025, a maximum of $8,000 can be carried forward for your 2026 contributions.
Tax deductions for FHSA contributions
Contributions made to an FHSA will be tax deductible and reduce taxable income for the current year.
Deductions do not have to be claimed in the year the contribution was made. They could be carried forward indefinitely and claimed in a later tax year.
Withdrawals
Amounts withdrawn from an FHSA will be tax-free if used to purchase a qualifying home. In all other cases, amounts withdrawn from an FHSA will be taxable.
Withdrawals are not capped. The only limit to how much one can withdraw is the amount accrued in the account, based on investment returns.
Unlike the HBP, withdrawals from an FHSA don’t have to be repaid.
Closing an FHSA
All FHSAs must be closed by December 31 of the year following the first qualifying withdrawal.
If money in the FHSA is not used to purchase an eligible first home, the account will cease to be an FHSA after December 31 of the year that the earliest of the following events occurs:
- the 15th anniversary of opening the first FHSA;
- the account holder turns 71 years of age.
The sums may be:
- Transferred on a tax-deferred basis to a registered retirement savings fund (RRSP) or registered retirement income fund (RRIF) depending on the person’s age without affecting their RRSP contribution room, OR
- Withdrawn and taxed.
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