What Is FHSA?

The First Home Savings Account (FHSA) launched in 2023 to help first-time home buyers save for their down payment. Like an RRSP, FHSA contributions are tax-deductible. Like a TFSA, withdrawals for qualifying home purchases are tax-free. This combination makes FHSA the most powerful savings vehicle for home buyers in Canada.

FHSA Contribution Limits & Carry-Forward

• Annual limit: $8,000 per year (2023–2026)
• Lifetime limit: $40,000 total
• Carry-forward: Unused room carries forward ONE year only. If you don't contribute $8,000 in 2025, you can contribute up to $16,000 in 2026 — but not beyond 2026.
• Account closure: You must withdraw funds or close your FHSA by the end of the year you turn 71, or 15 years after opening (whichever comes first).

Key Rules: Who Qualifies & What Counts

• First-time buyer: You must not have owned a principal residence in the 4 years before opening an FHSA.
• Qualifying home: A residential property that will be your principal residence, located in Canada.
• Spousal access: Only the account holder can withdraw — no spousal FHSA rules yet.
• Non-qualifying withdrawal: If you withdraw for non-home purposes, funds are taxable income. Unused FHSA room cannot be preserved if you don't buy a home before the account closes.

FHSA vs. RRSP Home Buyers' Plan (HBP)

You can use BOTH. The HBP lets you withdraw up to $35,000 from an RRSP tax-free if you're a first-time buyer. FHSA is separate: contribute $8,000/year, withdraw tax-free later. The tax deduction on FHSA + tax-free withdrawal makes it ideal if you have the contribution room. Use HBP only if you need more than $40,000 total or already have substantial RRSP savings.