An FHSA is a registered account in Canada that you can use to save money for a home (most likely a down-payment unless you invest the money for a long time or luck out with your investments). Like registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs), you can use this account to invest in an assortment of vehicles such as stocks, bonds, GICs (guaranteed investment certificates), etc. in order to grow your wealth.

FHSAs are very unique though in their tax structure. For example, RRSPs allow you to contribute pre-tax money into the account (that is, this money will be deducted from your annual income) while a TFSA uses post-tax money (you’ll have already paid tax on your annual income) to grow investments tax-free. When you withdraw the money from your TFSA, it will not be further taxed, but money from an RRSP will be taxed in some way (whether as a RRIF or whether you add it to your annual income) since you have not paid tax on the money yet.

The FHSA has the advantage of doing both. The money you invest in your FHSA will be deducted from your annual income and it will also not be taxed if it’s used to purchase a home (a “qualifying withdrawal”). Generally, this would mean your first home assuming all other conditions are met.

However, if you did not own a home in the previous 4 calendar years, then you would gain your status as a first-time home buyer back.

Example

If you last lived in a home you owned in 2019, then:

• 2020 → year 1
• 2021 → year 2
• 2022 → year 3
• 2023 → year 4

You would be qualify as a first‑time home buyer starting January 1, 2024 and could open an account starting on that date.

The contribution limit for the FHSA is $8,000 every calendar year from when you open it up to a maximum of $40,000 in contributions. Money that has grown in the account does not go against your contribution room (tax-free growth!) and if you didn’t contribute the maximum of $8,000 you can carry forward that amount to a future year.

Important to note – you should close all of your FHSAs on or before December 31 of the year following the year of your first qualifying withdrawal. This is because your maximum participation period  ends at the end of the year following the year of your first qualifying withdrawal.

For more information, consult the CRA’s website at