Investments / FHSA
FHSA: Save for Your First Home, Tax-Free
The First Home Savings Account combines the best of an RRSP and a TFSA: your contributions are tax-deductible, and withdrawals for your first home are completely tax-free.
Introduced in 2023, the FHSA is the most tax-efficient way for first-time buyers in Canada to save a down payment. You get a tax refund when you put money in, your savings grow tax-free, and you pay no tax when you use the money to buy a qualifying home.
FHSA at a glance
- $8,000Annual contribution limit
- $40,000Lifetime contribution limit
- $8,000Maximum unused room you can carry forward to the next year
- 15 yearsThe account can stay open for up to 15 years, or until age 71
- $0 taxon a qualifying withdrawal to buy your first home
- 18 to 71Age range to open an account
Room only starts building once you open an FHSA, so opening one early, even with a small deposit, can help.
Who qualifies?
- You are a Canadian resident between 18 and 71
- You did not live in a home that you or your spouse or common-law partner owned at any time this year or in the previous four calendar years
- You plan to buy a qualifying home in Canada to live in
FHSA vs. Home Buyers’ Plan vs. TFSA
FHSA
- Tax deduction when you contribute
- Tax-free withdrawal for a first home
- No repayment needed
- Up to $40,000 per person
RRSP Home Buyers’ Plan
- Withdraw up to $60,000 from your RRSP
- Must repay over 15 years
- Missed repayments are taxed
- Can be used together with an FHSA
TFSA
- No tax deduction
- Tax-free withdrawals for any purpose
- Flexible if you change your plans
- Good for extra savings
FHSA strategies
Open it early
Your room only starts building once the account is open, so open it as soon as you are thinking about buying.
Combine with the HBP
A couple can use two FHSAs and the Home Buyers’ Plan together for up to $200,000 toward a home, plus any growth.
Learn more →Save the deduction for later
You don’t have to claim the deduction in the year you contribute. Claiming it in a higher-income year can bring a bigger refund.
Invest, don’t just park cash
If your purchase is a few years away, invest your FHSA for growth instead of leaving it in cash.
Changed your mind?
Unused FHSA money can be moved to your RRSP or RRIF tax-free, without using your RRSP room.
Learn more →Two incomes, two accounts
Each spouse can open an FHSA, doubling the tax-free savings for your home.
Frequently asked questions
Can I contribute to my spouse’s FHSA?
You can give your spouse money to contribute, but the contribution and deduction belong to the account holder. Each person must qualify and open their own FHSA.
What happens if I don’t buy a home?
You can transfer the money to your RRSP or RRIF tax-free, without affecting your RRSP room. Otherwise, withdrawals that are not for a home are taxed as income.
Do I have to claim the deduction in the year I contribute?
No. You can carry the deduction forward and claim it in a later year when your income and tax rate may be higher.
Can I use both the FHSA and the Home Buyers’ Plan?
Yes. You can use your FHSA and the RRSP Home Buyers’ Plan together for the same home purchase.
Talk to Devendra Kumar, Financial Planner (CLU, CHS)
DK Insurance & Investment Inc. serves families across the GTA from offices in Vaughan, Mississauga and Brampton. Call or text +1-647-761-0517 for a free, no-obligation conversation.