Canada FHSA 2025 & 2026 — $8k Annual / $40k Lifetime (CRA Rules)

The First Home Savings Account (FHSA) is a registered savings plan introduced in 2023 that helps first-time home buyers save for a down payment. It combines the tax advantages of both the RRSP and the TFSA, making it one of the most powerful savings tools available to Canadians.

How the FHSA Works

The FHSA allows qualifying individuals to contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. Contributions are tax-deductible, just like an RRSP, and withdrawals used to purchase a qualifying home are completely tax-free, like a TFSA.

Unused contribution room can be carried forward to the following year, but only up to $8,000. This means the maximum contribution in any single year is $16,000 (the current year’s $8,000 plus $8,000 carried forward).

Eligibility Requirements

To open an FHSA, you must meet all of the following criteria:

• Be a Canadian resident
• Be at least 18 years old (or the age of majority in your province)
• Be a first-time home buyer, meaning you did not live in a home owned by you or your spouse in the current year or the preceding four calendar years

Key Advantages Over Other Accounts

The FHSA is unique because it offers a “double tax benefit.” Contributions reduce your taxable income today, and qualified withdrawals for a home purchase are tax-free. Neither the RRSP nor the TFSA offers both benefits simultaneously.

You can also use the FHSA in combination with the Home Buyers’ Plan (HBP). This means a first-time buyer could potentially withdraw from both an FHSA and an RRSP under the HBP for the same home purchase.

What Happens If You Do Not Buy a Home

The FHSA must be closed by December 31 of the year that is 15 years after the account was opened, or by the end of the year you turn 71, whichever comes first. If you have not used the funds to buy a home by then, you have two options:

• Transfer to an RRSP or RRIF without affecting your RRSP contribution room
• Withdraw the funds as taxable income

Transferring to an RRSP is generally the better option, as it preserves the tax-sheltered status of your savings.

Investment Options

Like an RRSP or TFSA, the FHSA can hold a variety of investments including stocks, bonds, mutual funds, ETFs, and GICs. The investment growth within the account is completely tax-sheltered.

2025 Contribution Details

• Annual limit: $8,000
• Lifetime limit: $40,000
• Maximum carry-forward: $8,000
• Maximum single-year contribution: $16,000 (with carry-forward)

Tips for Maximizing Your FHSA

1. Open the account as early as possible to start the 15-year clock and begin accumulating carry-forward room
2. Coordinate with your RRSP by contributing to the FHSA first if you are saving for a home, since it offers the additional tax-free withdrawal benefit
3. Consider your marginal tax rate when timing deductions — you can contribute now and defer the deduction to a higher-income year

Sources

• CRA — First Home Savings Account (FHSA)
• Department of Finance — Tax-Free First Home Savings Account