At Hayes Vickers Private Wealth (HVPW), we occasionally dedicate a blog to highlight the transformative potential of a single financial tool. This month, we’re focusing on the First Home Savings Account (FHSA), a powerful registered account designed to help Canadians save for a first home while maximizing tax efficiency. Whether you’re a first-time buyer or supporting a family member’s homeownership dreams, the FHSA offers tailored benefits to accelerate your savings journey.
Why choose an FHSA?
Introduced as a hybrid of an RRSP and TFSA, the FHSA combines the best of both worlds:
- Tax-deductible contributions: Reduce your taxable income, similar to an RRSP.
- Tax-free growth and withdrawals: Enjoy tax-free investment earnings and qualifying withdrawals for a home.
- Carry-forward contribution room: Unused annual contributions ($8,000 maximum) can be carried forward to future years, up to a lifetime limit of $40,000.
- Flexibility: If homeownership plans change, funds can be transferred tax-free to an RRSP or RRIF, preserving your retirement savings goals.
Key features of the FHSA
Who can open an FHSA?
- First-time home buyers: You and your spouse/common-law partner must not have owned a home (anywhere in the world) in the calendar year before opening the account or the preceding four years.
- Age and residency: Available to Canadian residents aged 18 or older (19 in some provinces) who will not be older than 71 on December 31 of the year the account is opened.
Contribution rules
- Annual limit: $8,000 per year.
- Lifetime limit: $40,000.
- Multiple accounts: You can hold more than one FHSA, but total contributions across all accounts must not exceed annual and lifetime limits.
- Carry-forward: Unused contribution room starts accumulating only after you open an FHSA. For example, if you open an account in 2025 but don’t contribute, you can contribute up to $16,000 in 2026 ($8,000 annual room + $8,000 carried forward).
Tax benefits
- Deductions: Contributions reduce taxable income, with savings based on your marginal tax rate.
- Tax-free growth: Investment income, capital gains, and withdrawals for a qualifying home are never taxed.
- Transfer flexibility: Funds can be transferred tax-free to an RRSP or RRIF, without reducing your RRSP contribution room.
Maximize your FHSA strategy
- Open early: Even if you don’t contribute immediately, opening an FHSA allows carry-forward room to accumulate.
- Gift contributions: Help family members (e.g., adult children) by gifting funds to contribute to their FHSA. Income earned on these gifts is not subject to attribution rules.
- Pair with the Home Buyers’ Plan (HBP): Withdraw up to $60,000 from your RRSP (interest-free, with repayment required within 15 years) alongside FHSA withdrawals for a combined maximum of $100,000 toward a home purchase.
Act now to unlock 2025 benefits
With the year-end approaching, the FHSA stands out as a strategic tool to boost your savings. By opening and funding your account before December 31, you’ll immediately start accumulating carry-forward contribution room for future years.
Your next steps
- Contact us by December 22, 2025: Ensure your FHSA is opened and funded before year-end to maximize tax advantages.
- Share this opportunity: Forward this blog to friends and family who may benefit from the FHSA.
- Have questions? Contact us to determine how FHSA aligns with your family's goals
Refer to the RBC Wealth Management Navigator Article for deeper insights and consult a tax professional for personalized advice.