Tax Deductible Contributions
Contributions to an FHSA are tax deductible just like an RRSP, reducing your taxable income for the year you contribute. Unlike the RRSP Home Buyers Plan, withdrawals for a qualifying home purchase are never taxed and never need to be repaid.
Annual and Lifetime Limits
There is an annual contribution limit as well as a lifetime maximum, and unused room from previous years can generally be carried forward. Planning your contributions over a few years can help you maximize the account before you are ready to buy.
Who Can Open One
You need to be a Canadian resident, at least 18 years old, and a first time buyer to open an FHSA. Once you have made a qualifying withdrawal, you generally cannot open a new one in the future.
Combining FHSA With the Home Buyers Plan
Because these are separate programs, you can use both the FHSA and the RRSP Home Buyers Plan for the same home purchase, giving you access to more tax advantaged savings than either program alone.
- FHSA withdrawals are never repaid
- Home Buyers Plan withdrawals must be repaid
- Both can be used together for one purchase
Timing Your Withdrawal
You need to have a signed agreement to buy or build a qualifying home before making a withdrawal, so plan your FHSA use around your actual home search timeline.
Frequently asked questions
- Do I have to repay FHSA withdrawals like the Home Buyers Plan?
- No, qualifying FHSA withdrawals for a first home are tax free and never need to be repaid.
- Can I use both the FHSA and Home Buyers Plan for the same purchase?
- Yes, the two programs are separate and can be combined for the same home.
- What happens to unused FHSA funds if I do not buy a home?
- You can transfer the funds to your RRSP or RRIF without immediate tax consequences.