FHSA (First Home Savings Account )
What is an FHSA?
An FHSA is a tax-free savings account designed to help future homeowners save for the purchase of a qualifying first home in Canada.
Combining the advantages of an RRSP and a TFSA, the FHSA gives you a deduction that reduces your annual taxable income and allows you to generate tax-free returns.
You can then use the accumulated funds to finance the purchase of a first home without having to pay taxes on withdrawals, and without having to repay the amounts withdrawn from the FHSA.
- Eligibility criteria
- Must be a Canadian resident.
- Must be of legal age in your province of residence.
- Must not be over 71 years of age as of December 31 of the current year.
- Must not have had a qualifying home in Canada as your principal place of residence that you or your spouse owned during the part of the calendar year preceding the opening of the FHSA or during the preceding four calendar years.
- Contribution deadline
The FHSA contribution deadline is December 31 of each year.*Available if you have already opened an FHSA.
- Contribution room
You can contribute up to $8,000 per year to your FHSA, for a maximum of $40,000 during your lifetime.
You can also carry forward up to $8,000 of unused contribution room from one year to the next, for a maximum annual contribution of $16,000.
- Tip
Contributing to an FHSA reduces your taxable income and may entitle you to a tax refund.
Key advantages of the FHSA
- As with an RRSP, your FHSA contributions reduce your annual taxable income.
- Your savings and returns generated in the FHSA are tax free upon withdrawal.
- Unlike RRSP withdrawals under the Home Buyers’ Plan (HBP), sums withdrawn from an FHSA for the purchase of a first home do not have to be repaid.
- You can carry forward up to $8,000 of unused contribution room, for a maximum annual contribution of $16,000.
- You can transfer funds from your FHSA to your RRSP or your RRIF if you are not using them.
Frequently Asked Questions
Please reach us at rupiothi@get-insured.ca if you cannot find an answer to your question.
Yes, you can have more than one FHSA. However, you must ensure that your total contributions do not exceed the $40,000 lifetime limit or the $8,000 in annual contributions to which you are entitled.
Please note also that your participation period begins when you conclude your first contract. You will therefore have to close all your FHSA accounts once the participation period has elapsed.
Yes. If you exceed your contribution limit, you will have to pay a penalty of 1% of the excess amount for each month there is a surplus in the account.
Please note that unlike RRSPs, you are not allowed an excess of $2,000 before you are penalized.
Yes, as with an RRSP, you can carry forward unused deductions to future years.
This could be a good strategy to consider if you expect a significant increase in your income in the years to come. For example, if you finish your studies and start your career.
If your spouse is a homeowner, you cannot open an FHSA as FHSA eligibility requires that neither you nor your spouse must have owned a home in Canada in the past four years, nor in the current year.
However, if you opened an FHSA before becoming the spouse of a homeowner, you can continue to contribute to your FHSA and use it to purchase your first home. Only the FHSA holder must meet the eligibility criteria in this context.
If you have any doubts, please don’t hesitate to consult an advisor to gain a full understanding of the details specific to your situation.
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