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Investment FAQs

First Home Savings Account (FHSA)

Select Category: General Opening an Account Contributions Withdrawals

General

A First Home Savings Account (FHSA) is a new type of registered plan that is designed to help Canadians save up to $40,000 on a tax-free basis to use towards the purchase of their first home.

FHSA is an acronym for First Home Savings Account, a type of registered plan that is designed to help Canadians save for their first home on a tax-free basis.

To open a First Home Savings Account (FHSA), you must be:

  • At least 18 years of age and no less than the age of majority in the province where you live
  • A Canadian resident
  • A first-time homebuyer (meaning, you and/or your spouse or common-law partner have not owned a home where you lived in the calendar year in which you open the account or at any time in the preceding four calendar years)

No, you can use both your First Home Savings Account (FHSA) as well as make a withdrawal from your Registered Retirement Savings Plan (RRSP) under the Home Buyers’ Plan (HBP) to purchase a qualifying home. Keep in mind that with a HBP withdrawal, you’ll have to repay any funds you withdraw from your RRSP. There is no repayment requirement for withdrawals from an FHSA.

You can hold the following product offerings in a First Home Savings Account (FHSA):

  • Savings deposits
  • Stocks, options and bonds
  • Exchange-Traded Funds (ETFs)
  • Cash

    • More products will become available over time.

Opening an Account

No, the First Home Savings Account (FHSA) is an individual account and cannot be held jointly. However, you and your spouse could each have an FHSA and can combine your savings to buy a qualifying home.

Plus, the attribution rules do not apply to amounts that you receive from your spouse or common-law partner that you contribute to your FHSA—and vice versa. This means that any investment earnings in your FHSA will not be added to your or your spouse’s taxable income regardless of whether you or your spouse fund the contribution, as long as they are used to purchase a qualifying home.

You can hold multiple First Home Savings Accounts (FHSAs), but your total contribution room will remain the same as if you had only one FHSA. Plus, your maximum participation period of 15 years will be based on the date you open your first account.

Contributions

The lifetime contribution limit for the First Home Savings Account (FHSA) is $40,000.

The annual contribution limit for the First Home Savings Account (FHSA) is $8,000. You may also be able to contribute up to $8,000 of unused contribution room from the previous year. That means you could contribute up to $16,000 in a given year, if you have contribution room left from the year prior.

Note: You do not start accumulating contribution room until you open an FHSA account.

Yes, you can carry forward any unused FHSA contribution room from the prior year up to a maximum of $8,000 (subject to your lifetime contribution limit of $40,000). This means that if you contribute less than $8,000 in a given year, you can contribute the unused amount next year in addition to the $8,000 annual contribution limit.

For example, if you contribute $5,000 to your FHSA in 2023, you would be allowed to contribute $11,000 in 2024 (i.e., $8,000 plus the remaining $3,000 from 2023).

You can only make contributions to your own First Home Savings Account (FHSA). Your spouse or partner can also have their own FHSA and make contributions to their account.

The attribution rules do not apply to amounts that you receive from your spouse or common-law partner that you contribute to your FHSA—and vice versa. This means that any investment earnings in your FHSA will not be added to your or your spouse’s taxable income regardless of whether you or your spouse fund the contribution, as long as they are used to purchase a qualifying home.

If you over contribute to your First Home Savings Account (FHSA), you’ll pay a 1% tax on the overcontributed amount each month until the excess amount is withdrawn, or until more contribution room becomes available.

For example, if you contribute $12,000 to your FHSA in December (and you had no unused FHSA contribution room carried forward), you’ll pay $40 (1% x $4,000 x 1 month). More contribution room would become available January 1, so at that time, the additional $4,000 would no longer be considered an overcontribution.

Withdrawals

If you withdraw only a portion of the funds from your First Home Savings Account (FHSA) to purchase your first home, you can transfer any remaining funds to your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) on a tax-free basis on or before December 31 of the year following the initial withdrawal. Otherwise, you can withdraw the remaining balance, but it will be taxed.

Assets in an FHSA must be Qualified Investments under the Income Tax Act. If the FHSA holds non-Qualified Investments, it could be subject to tax.
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