First Home Savings Account (FHSA)

April 11, 2023 | Posted by: Harold Hagen

First Home Savings Account (FHSA)


In its 2022 Federal Budget, the Canadian Government introduced the First Home Savings Account (FHSA) a new registered savings plan designed to help Canadians save for their first home. The new FHSA gives first-time borrowers more tax breaks to build a down payment. In a nutshell:

  • You can save up to $8,000 a year
  • Contributions to your FHSA are tax-deductible
  • Gains and withdrawals are TAX-FREE if used to buy a new home.

For someone earning $80,000, for example, deducting $8,000 would save a FTHB in Alberta $2,440 in income tax!

You can get a good idea of potential tax savings using this EY RRSP contribution calculator


Good-to-know points

  • Unlike the Home Buyers’ Plan (HBP), FHSA funds need not be repaid
  • Non-FTBs can still use one so long as they didn’t live in a home they or their spouse/partner owned in this or the prior four calendar years (i.e., after 2018)
  • You can carry over FHSA contribution room to the next year
  • Users have 15 years to apply FHSA funds to a home purchase
  • Those who don’t buy a home can transfer FHSA funds to an RRSP
  • Non-“qualifying withdrawals” are added to your taxable income
  • Unlike an RRSP, you can't deduct contributions made in the first 60 days of the year from your prior year’s income
  • You can use both the FHSA and HBP to buy a qualifying home
  • Two FHSAs can be used to buy a home if both buyers are first-timers

 Here’s CRA's page with complete details.


Strategies & considerations

Due to the extra tax benefit, using an FHSA before an RRSP or TFSA is a great idea for future home buyers. For parents who want to help their kids own, tax advisor Jamie Golombek suggets gifting children $8,000 a year for their FHSA. That way, their kids can invest and grow savings early on — and enjoy a tax deduction. FHSA deductions can even be deferred (carried forward) to a future year when you’re in a higher tax bracket, saving even more tax.


This is general information that's subject to change. It's provided as-is and is not meant to be advice, including but not limited to tax, legal or investing advice. Caveats apply to some of the points mentioned. Readers should consult a tax professional for guidance applicable to their circumstances.

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