The short version
- The FHSA is the only account that's deductible going in and tax-free coming out, as long as the money buys a qualifying first home.
- $8,000 of room a year, $40,000 lifetime. Unused room carries forward, but only up to $8,000, so the most you can put in one year is $16,000.
- You have to be 18 or older (up to 71), a Canadian resident, and a first-time home buyer: you haven't lived in a home you or your spouse owned in the current year or the previous four calendar years.
- Room only starts building once you open an account. Open one early, even with $10.
- Didn't buy a home? Transfer the money to your RRSP tax-free, without using RRSP room.
FHSA Tax Rules: Contributions and Withdrawals
The first home savings account is the rare tax rule that's simply generous. Put money in, deduct it like an RRSP. Take it out for a first home, pay no tax, like a TFSA. Don't buy a home, move it to your RRSP with no harm done. The only real mistake is not opening one.
Contributions and Room
| Rule | Amount |
|---|---|
| Annual room | $8,000 |
| Lifetime limit | $40,000 |
| Carry-forward of unused room | Up to $8,000 |
| Most you can contribute in one year | $16,000 (with full carry-forward) |
Room starts the year you open your first FHSA, not the year you turn 18. Open one and leave it nearly empty, and you've still banked $8,000 of room for next year. Investment growth doesn't use room. Your room appears on your notice of assessment and in CRA My Account after you file Schedule 15.
Go over the limit and an excess FHSA amount is taxed at 1% a month, much like a TFSA overcontribution.
The Deduction
FHSA contributions are deducted on your return, saving tax at your marginal rate. Like an RRSP, you don't have to take the deduction the year you contribute; you can carry it forward to a higher-income year. Contributions made in the first 60 days of a year count for that year only, not the year before (unlike an RRSP). How a deduction is valued is on RRSP tax deduction explained, and the RRSP tax savings calculator gives a close estimate for an FHSA deduction too.
FHSA, RRSP or both for your down payment?
Tell the assistant your income, province and when you plan to buy. It shows how much an FHSA saves you, and whether adding the Home Buyers' Plan makes sense.
Qualifying Withdrawals: Tax-Free
To take money out tax-free for a home, CRA's conditions are:
- First-time home buyer: you didn't live in a home you owned or jointly owned (or your spouse owned) as your principal residence at any time in the current year before the withdrawal (except the 30 days just before it) or in the previous four calendar years.
- A written agreement to buy or build a qualifying home in Canada, with the purchase or construction finished before October 1 of the year after the withdrawal.
- You intend to live in it as your principal residence within one year after buying or building it.
- Form RC725, given to your financial institution.
You can use the FHSA and the RRSP Home Buyers' Plan for the same home. A withdrawal that doesn't qualify is taxed as income.
Didn't Buy? Move It to Your RRSP
Direct transfers from an FHSA to an RRSP or RRIF are tax-free and don't use RRSP room (form RC721). That makes the FHSA a no-lose bet: worst case, you've built extra RRSP room. The account has to be closed by the end of the year after your first qualifying withdrawal, and generally after 15 years or the year you turn 71 if you never buy. More on the RRSP side in RRSP contribution limit.
Building Your Own Home?
Construction counts. The agreement can be a construction contract, and the deadline is the completion date. If you're building, you may also qualify for a GST/HST new housing rebate; Ontario owner-builders can check their HST rebate at OntarioHSTRebates.ca. The general rules on taxes when buying and selling are in the Canadian real estate tax guide.
Five FHSA Rules of Thumb
- Open one as early as you're eligible. Room only starts when you do.
- Don't waste the carry-forward; it stops at $8,000.
- Hold the deduction for a higher-income year if this one is low.
- Read the first-time buyer test carefully if you or your spouse owned a home in the last five years. Buying with parents or siblings? See buying property with family.
- Report it right. Schedule 15 and the deduction are where FHSA errors show up; Return Check looks for them before you file. A TFSA is the next stop for extra savings.
FHSA Questions
How much can I contribute to an FHSA?
$8,000 a year, up to $40,000 lifetime. Up to $8,000 of unused room carries forward, so the maximum in one year is $16,000.
Are FHSA contributions tax deductible?
Yes. Contributions are deductible, and you can carry the deduction forward to a later year.
Who qualifies as a first-time home buyer for the FHSA?
Someone who did not live in a home they or their spouse or common-law partner owned as their principal residence in the current year (except the 30 days before the withdrawal) or the previous four calendar years.
What happens to my FHSA if I don't buy a home?
You can transfer it directly to your RRSP or RRIF tax-free without using RRSP room, using form RC721. Other withdrawals are taxed as income.
Can I use the FHSA and the Home Buyers' Plan together?
Yes, for the same qualifying home, if you meet the conditions of each.
Sources: CRA, First Home Savings Account (FHSA); Participating in your FHSAs; Withdrawals and transfers out of your FHSAs; Contributing or transferring too much. Checked October 2026.
Last reviewed October 4, 2026 against CRA and Government of Canada sources. How we check our facts.