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The First Home Savings Account (FHSA) is a registered plan that gives first-time homebuyers the opportunity to invest up to $40,000 for the purchase of a first home on a tax-free basis. Like a Registered Retirement Savings Plan (RRSP), contributions are tax-deductible, and withdrawals to purchase a first home—including from investment income—are nontaxable, like a Tax-Free Savings Account (TFSA). 


How much can I contribute to a FHSA?

•  Annual contribution limit of $8,000.

• Lifetime contribution of $40,000.

•  Unused contribution room can be carried forward from past years up to a maximum of $8,000.

• Income earned is not taxable. 


Tax Deductions

Contributions made to an FHSA are deducted from your annual taxable income, reducing your tax liability. This tax deduction can result in immediate tax savings, allowing you to keep more money in your pocket.

Tax-Deferred Growth

Any investment gains within the FHSA are not subject to annual taxes. This tax-sheltered growth allows your investments to compound over time, maximizing your savings potential.

Tax-free withdrawal

When you withdraw funds from your FHSA for the purpose of purchasing your first home, they are tax-free. 

What is my contribution room?

  • Unlike a TFSA, you do not accumulate contribution room if your FHSA has not yet been opened.  

  • If you withdraw money from your FHSA unrelated to a home purchase, this contribution room is not reinstated the following year.

  • You can carry forward any unused portions of your annual contribution limit. For example, if you contribute $5,000 in year one, you can contribute the unused amount of $3,000 in year two, in addition to your annual contribution limit of $8,000 for a total of $11,000 in year two.

  • Your carry-forward amount must not exceed $8,000 and you cannot contribute more than $16,000 in the same calendar year. For example, if you contribute $1,000 in year one and $1,000 in year two, you can only contribute $16,000 in year three.

What if I contribute more than my limit? 

•  If your contribution exceeds your annual limit, you are subject to a 1% tax per month. This means if you contribute $9,000 in September of year one, you will pay 1% of $1,000 per month until January of year two. 

What is a qualifying withdrawal?

  • You must have a written agreement to buy or build a home in Canada by October 1st of the year after you make the withdrawal.

  • You must intend to live in the home as your principal residence within a year of buying or building it.

  • All FHSA funds may be withdrawn on a tax-free basis in a single withdrawal or a series of withdrawals. There is an exception that allows you to make qualifying withdrawals within 30 days of moving into your home. 

Can I use both the HBP and FHSA to purchase a home?

You can use both the HBP and the FHSA for a first home purchase with a maximum of $35,000 under the HBP. There is no maximum from the FHSA. Your $40,000 contribution to the FHSA can grow to a much larger amount by the time you are ready to purchase your home. You will not need to pay back the FHSA withdrawal however, the HBP withdrawal must be repaid. 


The FHSA is for Canadian residents 18 to 71 who do not currently own a home or have not owned a home in which they lived at any time in the last four calendar years Annual contribution limit of $8,000. Lifetime contribution of $40,000. Unused contribution room can be carried forward from past years up to a maximum of $8,000. Income earned is not taxable. Unused FHSA proceeds can be transferred to a RRSP or Registered Retirement Income Fund (RRIF) on a tax-free basis.

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Manpreet Singh
ਮਨਪ੍ਰੀਤ ਸਿੰਘ

Insurance Broker

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