First Home Savings Accounts (FHSA)

Sara, an established investor with substantial holdings in an RRSP, contemplated transitioning her focus to saving for a home. Content with her current rental apartment due to its convenient amenities and prime location, she consulted with an advisor at Affinity Credit Union. Together, they determined that an FHSA would suit her aspirations, considering her goal of saving for her first home within the next 15 years. If she chooses to remain in her apartment, she can later transfer her funds from the FHSA to an RRSP. While withdrawals from the RRSP would be taxed, she anticipates being in a lower tax bracket during that time. Sara and her advisor scheduled a follow-up meeting in a year to ensure the advice remains aligned with her financial goals and personal situation.

Mark and Jordan, a young couple, were excitedly planning to buy their first home, but they needed some financial support to make their dream a reality. Mark's parents, knowing their son's aspirations, wanted to help. In the case of the FHSA, there are certain income attribution rules to be aware of. Like other tax-advantaged accounts, it's important to remember that for compliance with the CRA, parents should avoid directly contributing to their adult child's FHSA.

They understood the complexities surrounding direct contributions to the FHSA and the importance of staying compliant with tax regulations.

Mark's parents decided to gift him $8,000 annually, which Mark and Jordan used for their day-to-day expenses. This strategic move not only eased the couple's financial burdens but also freed up $8,000 from their income, allowing them to maximize their FHSA contributions. By following these guidelines, they were able to use the gift from Mark's parents while effectively taking advantage of the benefits of the FHSA, ensuring a smooth and compliant process in achieving their goal of homeownership.

Emily is a cheerful 30-year-old Canadian resident who’s excited about her journey towards owning her own home. Eager to start saving, she planned to open an FHSA in June 2023. However, since she currently lives with her long-time partner who owns their shared home, she realized she didn't meet the requirements as a first-time homebuyer. Although she couldn't open an FHSA now, Emily remained positive and determined to explore other ways to achieve her goal of homeownership in the future.

Rachel is a renter who’s met all the criteria to open an FHSA in 2023. In 2025, she moved into a house owned by her partner. Five years later, in 2030, they made the exciting decision to purchase a new home together. Despite residing in a property owned by David during the previous four years, Rachel successfully made a tax-free withdrawal from her FHSA to aid in the acquisition of their new shared home.

The Smith family, is a lower-income household saving for their first home. Charlie, the main earner, had previously contributed to an RRSP, but with the realization that RRSPs might not be the best fit to save for their down payment, they sought a different solution. They discovered the FHSA and its benefits, realizing it could provide a more tax-efficient way to manage their funds. They began transferring their funds earmarked for their RRSP to the FHSA annually, using the $8,000 yearly limit and $40,000 lifetime cap. When the time came to purchase their first home, they were able to withdraw the entire FHSA tax-free. This strategic use of the FHSA provided them with a valuable opportunity to secure their dream home while optimizing their savings for a stable financial future.

A first-time home buyer is, if in the last four years, you haven't lived in a home that you owned, or one that your current spouse or common-law partner owned. This 'four-year period' simply means the four years before you buy your new home.

A qualifying home is a residential unit located within Canada. This includes both existing residential properties and those currently under construction. Eligible properties comprise single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, as well as, apartments situated within duplexes, triplexes, fourplexes or apartment buildings.

Yes, but the contribution limits are per person, not per FHSA. This means the combined contributions to each plan can’t exceed the annual $8,000 or lifetime contribution limit of $40,000.

Yes, but if you transfer from your RRSP, you won’t benefit from the tax deduction, since you would have already received that when you made your initial RRSP contribution. It’s important to keep in mind that annual and lifetime contribution limits apply to transfers as well.

Yes, you can carry forward any unused portion of your annual contribution limit up to a maximum of $8,000. This means that if you contribute less than $8,000 in a given year, you can contribute the unused amount in a subsequent year on top of your annual contribution limit (subject to your lifetime contribution limit).

Absolutely! If two people are purchasing a home together, they can combine their own FHSA funds towards the purchase.

Withdrawals made for any purpose other than purchasing your first home will be fully taxable in the year the withdrawal was made.

If your FHSA funds aren’t used within 15 years, you’ll have the option to transfer the accumulated funds into your RRSP or RRIF, even if you don't have contribution room. These sheltered transfers are not taxable, however subsequent withdrawals from those RRSP or RRIF plans are taxable as income upon withdrawal. If FHSA funds are not used or transferred after 15 years, you must withdraw the funds as taxable income and close the FHSA.

While the HBP is also a tool designed to help with the down payment for your first home, the funds (maximum of $35,000) come from your RRSP and must be paid back within 15 years. If you miss paying back your HBP, those missed payments are added to your income and you forfeit the accompanying contribution room in your RRSP. The amount you repay to your RRSP will eventually be taxed once you withdraw them, either through the RRSP or a RRIF, whereas the withdrawals from the FHSA are completely tax‑free.

You can also choose to withdraw funds from both your FHSA and your RRSP through the Home Buyers’ Plan. This could be a great way to increase the amount of your down payment on your first home purchase. If you and your spouse both qualify as first-time home buyers, you can both withdraw from your FHSA and your RRSPs through the Home Buyers’ Plan, if you choose. Chat with an advisor who can go over the benefits with you.