Periodic insights from our Investment and Private Client Teams on a broad range of investment and advice-related topics

First Home Savings Account

4 minute read

Published by the Private Client Team at KJ Harrison Investors

Key Points

  • After you open an account, the 15-year time limit starts. Consider your goals and whether you will be in a position to buy a home within 15 years.
  • Take advantage of the power of compound growth by contributing to the FHSA early.
  • The FHSA is only one of several accounts that you can use to save towards the purchase of a first home – you can combine the savings from your FHSA with the funds in a TFSA and the RRSP Home Buyers’ Plan to maximize your down payment.

Until recently, the best option for tax-advantaged savings for a first-time home purchase had been the RRSP Home Buyers’ Plan, which allows you to use money from your RRSP towards the purchase of a first home. That money then needs to be repaid to your RRSP over a 15-year period.

There is now a new king of the tax-advantaged ring. With the announcement, in 2022, of the tax-free First Home Savings Account (FHSA), which became available in 2023, there became a new preferred way to save for a first home.

This new account allows for:

  • $8,000 per year in tax-deductible contributions, as with RRSP contributions.
  • Investment growth in the account is tax-free, just like an RRSP or TFSA.
  • Withdrawals from the account to purchase a new home are tax-free, as is the case with a TFSA.
  • Unlike the RRSP Home Buyers’ Plan, where there is a requirement to repay, FHSA withdrawals carry no requirement to repay.

There is also an unusual amount of flexibility when it comes to funding an FHSA. Like RRSPs and TFSAs, you may hold multiple FHSAs, but your combined annual and lifetime contributions cannot exceed the respective limits (i.e. if you have two FHSAs, you can contribute $6,000 to one and $2,000 to the other, but the combined contributions cannot exceed $8,000 per year). You can also use money in an RRSP to make contributions to your FHSA, and you are not required to repay the money to the RRSP. Note, however, that you won’t get to double dip on the tax deduction, as you would have already received the tax deduction when you contributed to the RRSP. It won’t be possible to then claim a deduction for monies transferred from your RRSP to your FHSA.

The level of tax advantage and flexibility is unparalleled by any other account type currently available to first-time homebuyers in Canada.


There are several items to keep in mind when looking at this new account. Some of these include:

  • You must be at least 18 years old and a Canadian resident to open an account. You must be 71 years old or younger as of December 31st of the year you open your FHSA.
  • There is a lifetime contribution limit of $40,000. This is greater than the $35,000 that each individual is allowed to pull from their RRSP as part of the Home Buyers’ Plan.
  • Contribution room starts to accumulate from the year you open the FHSA.
  • Like an RRSP or TFSA, you can carry forward any unused contribution room (up to a maximum of $8k cumulative carry forward) from past years.
  • Withdrawals for purposes other than the purchase of a home are taxable (meaning that the amount of the withdrawal is added to your taxable income in the year of withdrawal).


  • Once you make a withdrawal, you must close the account by December 31st of the year following your first qualifying withdrawal, and you cannot open another one.
  • Parents or grandparents cannot contribute directly to their adult child’s FHSA. They can gift the money to their adult children, who can then use it to contribute to their FHSA, creating a tax deduction for the adult child’s contributions.
  • Funds in an FHSA must be used within 15 years of opening the account.
  • Unused savings must be shifted to an RRSP or an RRIF (a non-taxable event) or withdrawn on a taxable basis.
  • Another advantage of this account is that you do not need the RRSP/RRIF contribution room to make a transfer from your FHSA.
  • You must be able to show that you have not owned a home in the calendar year that you opened the account, or anytime in the four calendar years prior to opening the account. Additionally, you cannot have lived in (as your principal place of residence) a house owned by your spouse or common-law partner during the same time period.
  • You are only able to make withdrawals for one property in your lifetime.
  • If you are looking to maximize your down payment, you can combine your FHSA, RRSP and TFSA funds to make a greater dent in your first home purchase.


Make no mistake, the new Tax-Free First Home Savings Account is the best new way for individuals to save up for the purchase of their first home. It has the combined benefits of a TFSA and an RRSP. While it isn’t going to do anything to stop the skyrocketing trajectory of housing prices, it is at least going to eliminate the burden of tax for individuals attempting to save up for their first house.

FHSA’s are now available to all eligible KJ Harrison clients. Your Portfolio Manager will be happy to assist in setting one up for you, and as always, if you have any questions about homebuying, financing a house, saving for a down payment, or any other finance-related questions, please never hesitate to reach out.


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