What Is FHSA (First Home Savings Account)?
A new registered account (introduced 2023) combining RRSP and TFSA benefits: contributions are tax-deductible and qualifying withdrawals for a first home are tax-free.
Definition
The First Home Savings Account (FHSA) was introduced by the Canadian government in 2023 specifically to help first-time home buyers save for a down payment. Contributions to an FHSA are tax-deductible (like an RRSP), and qualifying withdrawals for a first home purchase are entirely tax-free (like a TFSA). The annual FHSA contribution limit is $8,000, with a lifetime maximum of $40,000. Unused contribution room carries forward by one year. You must be a Canadian resident, at least 18 years old, and a first-time buyer (not having owned a principal residence in the current year or the preceding four years). If you do not use the FHSA to buy a home, you can transfer the balance to an RRSP or RRIF without penalty.
Formula
Example
You open an FHSA and contribute $8,000 in 2026. This reduces your taxable income by $8,000 (like an RRSP). In 2028 you buy your first home and withdraw the full balance tax-free to use as a down payment.