Real Estate · Canada

FHSA: The First-Home Account That Beats Both RRSP and TFSA

The First Home Savings Account is the rare account with no tax catch: contributions are deductible like an RRSP, and qualifying withdrawals are tax-free like a TFSA. If you're a Canadian saving for a first home and you're not using one, you're leaving the country's best tax deal on the table.

The rules in one table

Rule	Detail
Annual room	$8,000 (unused room carries forward, max $8,000 of carry-forward)
Lifetime cap	$40,000
Tax going in	Deductible against income (like an RRSP; deduction can be deferred)
Tax coming out	$0 on a qualifying first-home purchase — contributions and growth
Eligibility	18+, resident, no home owned (by you or a spouse you lived with) this year or the previous four
Time limit	Use within 15 years of opening (or by age 71); unused funds roll to your RRSP without using RRSP room

Stacking with the Home Buyers' Plan

You can use the FHSA and the RRSP Home Buyers' Plan on the same purchase. The HBP lets you borrow up to $60,000 from your RRSP (raised in 2024), repayable over 15 years. A couple maxing both vehicles can put well over $200,000 of tax-advantaged money toward a first home — $40,000 FHSA + $60,000 HBP each.

The moves people miss

• Open it early, even with $50. Room only starts accruing once the account exists — opening at 25 instead of 30 is up to $40,000 of extra room earned over the wait.
• Defer the deduction if you're early-career: contribute now, claim the deduction in a higher-bracket year. Same trick as the RRSP, same payoff.
• No home in the end? You lose nothing. The balance rolls into your RRSP tax-deferred without consuming RRSP room — the FHSA is effectively free extra RRSP room with a tax-free-home option attached.
• The trap: unlike the TFSA, withdrawals for anything other than a qualifying home purchase are fully taxable. This is home-or-retirement money, not an emergency fund.

Sources

• Canada Revenue Agency — First Home Savings Account (contribution rules, qualifying withdrawals)
• CRA — Home Buyers' Plan withdrawal limit ($60,000, Budget 2024)
• Department of Finance — FHSA design (Budget 2022)

Figures as of June 2026. Limits and eligibility can change at federal budgets — verify with the CRA. This is general information, not regulated financial advice.