Canada's First Home Savings Account, in plain English
The First Home Savings Account, usually shortened to FHSA, is a registered plan that helps Canadians save for a first home. It is the only common registered account that gives you a tax deduction when money goes in and a tax-free withdrawal when money comes out for a qualifying first home, with nothing to repay. It has been available since 1 April 2023, and the rules are federal, so they are the same in every province and territory. This site explains the FHSA in plain English: who can open one, how much room you get, how the deduction works, how a qualifying withdrawal works, how it combines with the RRSP Home Buyers' Plan, and what happens if you never buy.
The FHSA in one paragraph
If you are a resident of Canada, 18 or older, and a first-time home buyer under the Canada Revenue Agency's definition, you can open an FHSA and contribute up to $8,000 of participation room in the first year, up to a $40,000 lifetime limit. Contributions are generally tax-deductible, investment growth inside the account is tax-free, and a qualifying withdrawal to buy or build a qualifying home in Canada is tax-free and never repaid. Unused room carries forward, but only up to $8,000 of carry-forward can be used in a single year, so the most you can normally contribute in one year is $16,000. The account must be closed by 31 December of the year of the earliest of three events: the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal. If you never buy, you can transfer the balance directly to your RRSP or RRIF tax-free, or withdraw it as taxable income.
The figures at a glance
| Item | Figure |
|---|---|
| Participation room, first year you open | $8,000 |
| Lifetime limit (contributions + RRSP transfers) | $40,000 |
| Carry-forward usable in one year | Up to $8,000, so normally $16,000 at most in one year |
| Contribution deadline | 31 December of the calendar year (no 60-day rule) |
| Tax on a qualifying withdrawal | Nil, and nothing to repay |
| Tax on an excess amount | 1% per month on the highest excess in the month |
| Home Buyers' Plan limit (for withdrawals after 16 April 2024) | $60,000 per person from an RRSP, repaid over 15 years |
| Maximum participation period ends | 31 December of the year of the earliest of: 15th anniversary, turning 71, year after first qualifying withdrawal |
What the FHSA is, and what it is not
| The FHSA is | The FHSA is not |
|---|---|
| A registered savings account for a first home | A grant or a government payment |
| Tax-deductible going in, tax-free coming out for a qualifying home | A TFSA: withdrawals for other purposes are taxable |
| Room that starts only when you open your first account | Room that builds from age 18 like TFSA room |
| Combinable with the Home Buyers' Plan for the same home | A replacement for a mortgage or a down payment on its own |
| Transferable directly to your RRSP or RRIF if you never buy | Transferable directly to a TFSA, RESP, or RDSP |
How this site is organized
Start with what the FHSA is for the shape of the account, then who qualifies for the opening test, including the spouse trap. Limits and room explains participation room, carry-forward, and the excess tax. Tax deduction explains when to claim and the no-60-day rule. Qualifying withdrawal lists every condition and every qualifying home type. FHSA + Home Buyers' Plan explains how the two stack. Transfers out covers the direct transfer to an RRSP or RRIF and the transfers that are not allowed. Deadlines and closing covers the 15-year clock and what happens if you never buy. How to open walks through opening and tracking your room, and Problems and FAQ collects the common traps and answers.
Sources: Canada Revenue Agency, First Home Savings Account (FHSA) pages: Participating in your FHSAs; Withdrawals and transfers out of your FHSAs; Register a qualifying arrangement as an FHSA; Important dates for RRSPs, HBP, LLP, FHSAs and more.