FAQs about First Home Savings Accounts (FHSAs)
/With First Home Savings Accounts (FHSAs) being so new, we compiled our list of top questions for you. Make sure you check out our intro post on FHSAs for more general information.
Contributions
How much can I contribute to my FHSA?
By default, you can contribute $8,000 per year, up to a $40,000 lifetime limit. If you had an FHSA open in previous years but didn’t contribute the full amount, you can carry forward up to $8,000 of unused room each year.
Example: Marissa opens an FHSA in 2023 and contributes $5,000. In 2024, she can contribute up to $11,000 ($8,000 plus $3,000 carried forward from 2023).
Example: Sam opens an FHSA in 2023 and doesn’t contribute anything in 2023 and 2024. In 2025, he can contribute up to $16,000 ($8,000 for 2025 plus $8,000 carried forward).
Keep in mind, you only start accumulating contribution room once you open your FHSA. So if you open an account in December 2023 and don’t contribute anything, you’ll be able to contribute $16,000 starting January 2024. But if you wait until January 2024 to open your account, you can only contribute $8,000 that year.
What happens if I contribute to my FHSA but don’t end up buying a home?
You have up to 15 years after opening your FHSA to withdraw the funds for your first home. If that doesn’t happen, you can either withdraw the funds from your FHSA (and pay tax on it) or transfer it tax-free to your RRSP.
Tax deductions
How does the tax deduction work?
It works in a similar way to RRSPs. Let’s say you contribute $8,000 to your FHSA. That means you can deduct $8,000 on that year’s taxes. It essentially means you won’t have to pay tax on that amount.
If I contribute to my FHSA in January 2024, can I deduct it on my 2023 taxes?
No. With RRSPs, you can deduct contributions you make in the first 60 days of the year on your previous year’s taxes, but FHSAs don’t have the same rule.
If my income is low, do I have to deduct my FHSA contribution?
No. You can carry forward your FHSA deduction to future years, which might be more advantageous if your income is going to be higher. Don’t worry - we’ll help you with that decision so we can optimize your taxes.
Withdrawals
How do I withdraw from my FHSA?
You’ll need to complete a form with your financial institution. If you meet all the criteria, the withdrawal will be tax-free.
When can I withdraw from my FHSA?
You can make a tax-free withdrawal any time after you have a written agreement to buy your first home (like an accepted offer agreement), and up to 30 days after acquiring the home. You must be closing on the new home before October 1 of the following year.
Can I contribute to my FHSA and then immediately withdraw it to buy my first home?
Yes, as long as you meet all the other conditions. Unlike the Home Buyers’ Plan, there’s no waiting period before withdrawing.
I’ve been saving in my FHSA for my first home, but needed to withdraw $5,000 for a car payment. What happens now?
That withdrawal will be taxed since you weren’t eligible for a tax-free withdrawal. That means the $5,000 is added to your income for the year and you’re taxed on it.
Spouses & common-law partners
We’ll use “partners” to refer to both legal spouses and common-law partners. Remember, what matters is being common-law for tax purposes, which is different from other definitions.
Can my partner and I each open FHSAs?
Yes, you each have a contribution limit of $8,000 per year and $40,000 lifetime.
My partner already owns a home. How do the rules apply?
Opening an FHSA – If your partner already owns a home, then you can’t open an FHSA. But let’s say you’re not partners yet. For example, if you just move in to your boyfriend’s home that he wholly owns, you may not be considered common-law partners yet. Even though you live together, you can still open an FHSA until you become married or common-law for tax purposes.
Withdrawing from an FHSA – If you already have an FHSA, you can withdraw from it tax-free for your first home, even if your partner already owns a home. Let’s say you opened an FHSA, and you later moved into your partner’s home that they own. You then decide to upsize and you buy a new home together, which will be the first time you own a home. You can still withdraw from your FHSA tax-free in this example.
My partner has a lot of money. Can they fund my FHSA?
Your partner can’t contribute directly to your FHSA. But they can gift you the funds, which you can then contribute to your FHSA. You’ll receive the tax deduction for the contribution.
TFSAs, RRSPs and the Home Buyers’ Plan (HBP)
Can I use the FHSA and the Home Buyers’ Plan on the same home?
Yes. That means you can withdraw the full amount from your FHSA, plus up to $35,000 from your RRSP. Keep in mind, you’ll need to repay whatever you withdraw from your RRSP, but the FHSA funds are yours to keep.
I have money in my RRSP that I was planning on using for my home down payment. Can I use those funds for my FHSA instead
Yes. You’re able to transfer funds from your RRSP to your FHSA, and then withdraw it tax-free to buy your first home. Keep in mind, these transfers count towards your FHSA contribution limits, but you won’t receive an additional deduction (since you already received one when contributing to the RRSP). Make sure you talk to your financial institution to complete the transfer, as you can’t withdraw the funds yourself from the RRSP.
What should I contribute to first – RRSP, FHSA or TFSA?
For most people saving for their first home, the FHSA should be the place to start. Once you max out your FHSA, your TFSA is likely best if you’re in a lower tax bracket (say, $60,000 or less), and your RRSP is better if you’re in a higher tax bracket. Keep in mind, that’s general guidance, as the optimal answer depends on a lot of factors.
When is a TFSA better than an FHSA?
If you’re not certain you’re going to buy a home and you might want to use those funds on something else, a TFSA might be better. For example, if you have $5,000 to invest and you’re still deciding whether to use it towards a home down payment or towards a car, then a TFSA is likely better since you can withdraw the funds tax-free for any reason.