First Home Savings Account (FHSA)

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What Is a First Home Savings Account (FHSA)?

A First Home Savings Account (FHSA) is a special type of savings account in Canada. It helps people save money to buy their first home. The best part? You don’t have to pay taxes on the money you save or the money you take out to buy your home!

Who Can Open an FHSA?

To open an FHSA, you must:
• Be at least 18 years old
• Be a resident of Canada
• Be a first-time home buyer (this means you haven’t lived in a home you owned, or one owned by your spouse or partner, in the last 4 years)

How Much Can You Save?

• You can put in up to $8,000 each year
• The lifetime limit is $40,000
• If you don’t use all your room one year, you can carry it forward to the next year (up to $8,000)

What Are the Benefits?

Here are some great reasons to open an FHSA:

1. Tax-Free Growth

Any money you earn in the account (like interest or investment gains) is not taxed.

2. Tax Deductions

The money you put in can be deducted from your income when you do your taxes. This means you might get a bigger tax refund.

3. Tax-Free Withdrawals

When you take the money out to buy your first home, you don’t pay any tax on it.

4. Flexible Investments

You can invest your FHSA money in things like mutual funds, stocks, or GICs—just like with an RRSP or TFSA

Other Important Rules

• You can keep your FHSA open for up to 15 years, or until you turn 71, whichever comes first.
• Once you use the money to buy a home, you must close the account by the end of the next year.
• If you put in too much, you’ll pay a 1% penalty each month on the extra amount.

Why It’s a Smart Move

Saving for a home can be hard, especially with rising prices. The FHSA gives you a head start by letting your money grow faster—without taxes getting in the way and letting you use the resulting refunds to turbo charge your down payment savings. It’s like combining the best parts of an RRSP and a TFSA into one powerful tool.

For further information on how a First Home Savings Account can help you reach your home ownership goal give us a call or email askacpa@analytic.cpa.

Gerald has worked in public accounting for over 25 years.  He does all manner of tax planning including helping you decide if incorporation is right for you.  He is also a Quickbooks Certified ProAdvisor.  Contact him if you have any questions at askacpa@analytic.cpa or give him a call at 306-937-7001 (Battlefords) or 306-236-5675 (North West Saskatchewan) for practical guidance and solutions to start a new business or kickstart your existing business.  Gerald and his team are here to help you regain control of your financial future—offering clear, professional support every step of the way.