FHSA FAQs

Announced in the 2022 federal budget, an FHSA is a new type of registered savings plan. It aims to help first-time home buyers save, thereby facilitating access to homeownership.

An FHSA allows you to:

Deduct the contributions from your annual taxable income, as with a Registered Retirement Savings Plan (RRSP)
Generate tax-free returns, as with a Tax-Free Savings Account (TFSA) and RRSP
Use the funds you accumulate to buy a first home in Canada
Also, unlike withdrawals made from an RRSP under the Home Buyers’ Plan (HBP), funds withdrawn from an FHSA do not have to be paid back.
 

To qualify for an FHSA, you must:

• Be a resident of Canada and have a social insurance number
• Be at least 18 years of age or the age of majority in your province of residence
• Be under 71 years of age (same age limit as an RRSP)

Not have lived in a qualifying home in Canada that you and your spouse owned at any time in the calendar year that the account is opened or at any time in the preceding four calendar years

Yes. At the time of withdrawal to purchase a first home, the account holder must confirm that they still qualify for their FHSA. Please note that this only affects the FHSA account holder and that, once a proof of or agreement to purchase (i.e. an offer) has been submitted, they may withdraw the funds tax-free, even if their spouse is a homeowner.

The maximum contribution room for an FHSA is $8,000 per year, per eligible person. You can contribute a lifetime limit of $40,000 over a maximum of 15 years following the opening of your FHSA. Your contribution room accumulates annually as of the year of opening. You will therefore need at least five years to reach the limit of $40,000.

Once your FHSA is open, you can also carry forward any unused contribution room. However, the maximum unused amount you can contribute each year is limited to $8,000..

Would you like to help your child save for their FHSA?

Even if you cannot contribute directly to someone else’s FHSA, you can give your child a monetary gift, which they can then contribute to their FHSA. This is a good strategy for parents who want to help their children become homeowners.

Unlike RRSPs, which allow contributions up to 60 days after the end of the fiscal year, the deadline to contribute to your FHSA is December 31 of each year.

FHSA deductions can be carried forward until the age of 71, even after the account has been closed. It could therefore be advantageous to carry these deductions forward if you foresee your income increasing in the coming years.

You can contribute to your FHSA until December 31, 15 years after opening your account or until you turn 71 years of age.

After being used to purchase a property, your FHSA will remain open until December 31 of the year following your first qualifying withdrawal.. For example, if you withdraw part of your FHSA in 2032, it must be closed by the end of 2033 at the latest.

If you do not use your FHSA during the participation period, you can:

Transfer your savings to a Registered Retirement Savings Plan (RRSP), regardless of the contribution room remaining in your RRSP

Transfer your savings to a Registered Retirement Income Fund (RRIF)

Withdraw the funds yourself: in this case, your contributions and the returns generated in your FHSA will be 100% taxable

It is possible to open more than one FHSA, but your participation period is limited to 15 years after opening your first account. If you have more than one FHSA, your contribution limit remains at $8,000 per year for a lifetime limit of $40,000.

No, withdrawals made from an FHSA in order to purchase a first qualifying home (as defined in the regulations) are not taxable. This includes, if applicable, the returns generated through an FHSA, which could allow you to increase your down payment.
 

Yes. Using your RRSP to take advantage of the Home Buyers’ Plan (HBP) remains beneficial.

A HBP allows you to use the funds in your RRSP to buy a first home. The withdrawal limit is $35,000. You then have 15 years to pay the funds you withdrew back to your RRSP.

Here are two examples of situations where an RRSP can fit into your homebuying strategy:

Buying a home within two or three years: If you require a significant down payment to purchase your home, the HBP (from your RRSP) could be more beneficial because of its higher annual contribution limit versus an FHSA’s (which is $8,000 per year). However, if your down payment is more modest, the contribution room provided by your FHSA may suffice.

Combining your RRSP and FHSA assets: Once you reach your FHSA’s contribution limit, it could be beneficial to contribute to your RRSP to eventually combine the two plans. In this way, you would have access to more capital for your down payment, as you can use both your FHSA and the contributions invested in your RRSP for the HBP.

A TFSA is also an interesting savings vehicle for several reasons. Here are a few:

Since an FHSA has a maximum contribution period of 15 years, which begins when your first FHSA is opened, it could be beneficial to start saving in a TFSA first. You could then transfer these savings and the returns they have generated to an FHSA, taking full advantage of your contribution room. Also, you can reuse your TFSA contribution room the following year.
A TFSA offers greater flexibility when it comes to withdrawing your savings. Money invested in your TFSA can therefore be used to save for a down payment, but also for other important plans or to build a contingency fund.
The strategy to choose depends on your capacity to save and the timeframe you have to purchase your home. 

Comparative summary of these three savings options

	RRSP	TFSA	FHSA
Main objective	Savings and retirement	Miscellaneous savings	Buying a first home
Secondary objective	HBP	Savings and retirement	Savings and retirement
Minimum age	None	18 years	18 years
Maximum age	71 years	None	71 years
Annual contribution limit	18% of your previous year’s income or the current year’s annual limit.	$6,500 in 2023	$8,000 per year $40,000 lifetime maximum
Maximum participation period	Up to age 71	None	Closing no earlier than December 31 of the year following either: The fifteenth anniversary of your first FHSA; Your qualifying withdrawal; or Your 71st birthday.
Plan conversion	Possible with an RRIF, no later than age 71	No	Can be transferred to an RRSP or RRIF.