FHSA (First Home Savings Account)
The FHSA is a registered savings account introduced in 2023 that combines the best features of an RRSP and TFSA for first-time home buyers. Contributions are tax-deductible (like an RRSP), investment growth is tax-free, and qualifying withdrawals to purchase a first home are also tax-free (like a TFSA) — a triple tax advantage.
The annual contribution limit is $8,000, with a lifetime maximum of $40,000. Unused contribution room can be carried forward to the following year (up to $8,000 maximum carry-forward). At a 40% marginal rate, maximizing your FHSA contributions would save $16,000 in tax over 5 years.
To open an FHSA, you must be a Canadian resident aged 18–71 who has not lived in a home you or your spouse owned in the current year or the preceding 4 calendar years. The account must be used within 15 years of opening, or by December 31 of the year you turn 71. Unused funds can be transferred to an RRSP or RRIF without affecting your contribution room.
Related Terms
RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal.
TFSA (Tax-Free Savings Account)
A TFSA allows Canadian residents aged 18 and older to invest money and withdraw it at any time without paying tax on the growth.
HBP (Home Buyers' Plan)
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to $35,000 from their RRSP tax-free to purchase or build a qualifying home.