The First Home Savings Account (FHSA)

The First Home Savings Account (FHSA)

The Canadian government has launched the First Home Savings Account (FHSA), which offers tax breaks to first-time buyers to build a down payment. Under the FHSA, first-time buyers can save up to $8,000 a year ($40,000 lifetime), with contributions being tax-deductible and gains and withdrawals being tax-free if used to buy a qualifying principal residence.

Unlike the Home Buyers’ Plan (HBP), FHSA funds need not be repaid, and non-FTBs can use it if they didn’t live in a home they or their spouse/partner owned in this or the prior four calendar years. The FHSA is a good option for future home buyers, and financial professionals can benefit from offering information on this money-saving opportunity to clients.

Good-to-know points

  • Unlike the Home Buyers’ Plan (HBP), FHSA funds need not be repaid
  • Non first time home buyers can still use one so long as they didn’t live in a home they or their spouse/partner owned in this or the prior four calendar years (i.e., after 2018)
  • You can carry over the FHSA contribution room to the next year
  • Users have 15 years to apply FHSA funds to a home purchase
  • Those who don’t buy a home can transfer FHSA funds to an RRSP
  • Non-“qualifying withdrawals” are added to your taxable income.
  • Unlike an RRSP, you can't deduct contributions made in the first 60 days of the year from your prior year’s income.
  • You can use both the FHSA and HBP to buy a qualifying home.
  • Two FHSAs can be used to buy a home if both buyers are first-timers.

People can get a quick idea of potential tax savings—based on their income—using this EY RRSP contribution calculator.

Here’s CRA's page with complete details.

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