Investments

FHSA — First Home Savings Account

The newest registered account, introduced in 2023, and the most generous thing available to a first-time buyer. Contributions are deductible like an RRSP, and qualifying withdrawals for a home are tax-free like a TFSA. No other account gives you both ends.

How It Works

The rules that matter

Who can open one

You need to be a Canadian resident, at least the age of majority in your province, and under 71 at the end of the year. The important condition is the first-home test: neither you nor a spouse or common-law partner can have lived in a home you owned during the year the account is opened or the previous four calendar years.

That four-year look-back means people who owned a home some years ago can sometimes qualify again. It is worth checking rather than assuming you are ineligible.

Contributions and the deduction

Up to $8,000 a year, with a lifetime cap of $40,000. Contributions are deductible against income, and the deduction can be carried forward to a later year if your income will be higher then — useful early in a career.

Transferring money in from an RRSP is allowed and does not trigger tax, but it uses up FHSA deduction room rather than creating new deductions, since you already claimed the deduction on the way into the RRSP.

Taking the money out

A qualifying withdrawal for a first home is entirely tax-free, and unlike the RRSP Home Buyers\’ Plan there is nothing to repay. If you never buy, the balance can generally be transferred to an RRSP or RRIF without using RRSP room — so the saving is not wasted, it just becomes retirement money.

Comparing

FHSA or the Home Buyers' Plan?

Both let you use registered savings for a first home. They are not mutually exclusive, and for a buyer with enough saved, using both is usually the strongest position.

The FHSA is simpler

Deduction on the way in, no tax on the way out, nothing to repay. The Home Buyers\’ Plan gives you the money tax-free too, but it is a loan from your own RRSP that has to be repaid on schedule — and any missed repayment is added to your income for that year.

The FHSA has a lower ceiling

$40,000 over a lifetime, against a larger amount available under the Home Buyers\’ Plan. For a modest deposit the FHSA may be all you need; for a larger one, the two together go further than either alone.

Open one early even if you cannot fill it

Contribution room only starts accumulating once the account exists, and there is a limit on how much can carry forward. Opening an account with a small amount starts the clock — a genuinely useful thing to do years before you are ready to buy.

The account has a lifespan. An FHSA cannot stay open indefinitely — it has to be used, transferred or closed within a set period after opening, and by a maximum age. Anything left when the deadline arrives can usually roll into an RRSP rather than being lost, but the deadline is real and worth diarising when you open the account.

No obligation

Are you still a first-time buyer?

The four-year look-back catches people out in both directions — some think they qualify and do not, others assume they cannot and in fact can. Tell an advisor when you last owned a home you lived in, and you will get a clear answer.

Talk to an advisor

FHSA questions

Yes, and they are separate. FHSA contributions do not use RRSP room, so you can contribute to both in the same year if you have the money and the room.

The balance can generally be transferred to an RRSP or RRIF without using RRSP contribution room. You lose the tax-free withdrawal, but nothing you saved is wasted.

If you each meet the first-time buyer test, yes — and that doubles what the household can shelter. Note the test looks at your spouse’s ownership as well as your own, which is what usually decides it.

Some of it, up to a limit, and only once the account has been opened. This is the main reason to open one early even with a token amount.

For a qualifying first-home purchase, yes, and there is nothing to repay. That is the principal advantage over the RRSP Home Buyers’ Plan.

Saving for a first home?

Call 437-428-2828 and talk it through with a licensed advisor. Mon–Sat, 9am–8pm ET. No obligation, and nobody will push you to buy on the call.

Call 437-428-2828