Two tax breaks, one account
The FHSA launched in April 2023 and is specifically designed for Canadians saving toward a first home. When you contribute, you get a tax deduction that reduces your income for the year — the same benefit an RRSP provides. When you withdraw to buy a qualifying home, the entire amount comes out tax-free — the same benefit a TFSA provides. No other registered account combines both.
For someone putting away $8,000 a year in a 40% tax bracket, that deduction alone saves $3,200 in tax each year. Combined with the tax-free growth and tax-free withdrawal, an FHSA used to its full potential is the most efficient way for a first-time buyer to save for a down payment.
How the FHSA works
Who qualifies
You must be a Canadian resident, at least 18 years old, and a first-time home buyer — meaning you have not owned a home that you lived in at any point in the current calendar year or the preceding four years.
Annual contribution limit
$8,000 per year. If you contribute less than the maximum, up to $8,000 of unused room carries forward to the next year. The total lifetime contribution limit is $40,000.
Tax deduction on contributions
Contributions reduce your taxable income for the year, just like RRSP contributions. You can also carry forward unused deductions to a future tax year when the deduction may be more valuable.
Tax-free qualifying withdrawals
When you withdraw from your FHSA to buy a qualifying first home, the full amount comes out tax-free — including any investment growth. You do not repay the amount like you would under the RRSP Home Buyers' Plan.
Account lifespan
An FHSA can remain open for up to 15 years, or until December 31 of the year you turn 71. If you have not bought a home by then, the balance transfers to your RRSP or RRIF without using any RRSP contribution room.
FHSA vs. other first-home saving options
| FHSA | TFSA | RRSP (HBP) | |
|---|---|---|---|
| Tax deduction on contributions | Yes | No | Yes (RRSP contribution) |
| Tax-free qualifying withdrawal | Yes — no repayment required | Yes | Withdrawals must be repaid over 15 years |
| Annual limit | $8,000 (up to $8,000 carryforward) | Set annually by government | Up to $60,000 lifetime from RRSP |
| Lifetime limit | $40,000 | No lifetime limit | $60,000 |
| If you never buy a home | Transfer to RRSP/RRIF, no room used | Keep and use for any purpose | No withdrawal needed |
Service area
Jatinder Singh and his team serve clients across Ontario and Alberta. Appointments are available in person at 195 Queen St E, Brampton, or by phone.