The First Home Savings Account Has Arrived

Canadians have gotten a boost to save for buying a home.  The new registered plan, the First Home Savings Account (FHSA), which was included in the last budget from the governing Liberals, became available on April 1, 2023.

What You Need to Know

The FHSA will allow Canadians over the age of majority (age 19 for BC) to contribute up to $8,000 per calendar year, up to a lifetime contribution limit of $40,000, into the account.  Unused contribution room at the end of the year, up to a maximum of $8,000, can be carried forward to the next year, though the carry-forward amounts do not start accumulating until after you open an FHSA.

The account can stay open for 15 years from opening date, or until the end of the year you turn 71, whichever comes first.  

To open an account, you must be: 

  • a resident of Canada
  • over the age of majority in your province of residence (age 19 for BC)
  • a first-time home buyer, which means you, or your spouse or common-law partner, did not own a qualifying home that you lived in as a principal place of residence at any time in the year the account is opened or the preceding four calendar years

FHSA combines the best of the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).  The contributions are tax deductible, and the money grows inside the account tax free.  If you meet the qualifying withdrawal conditions, the funds can then be withdrawn from the account tax-free.   

Any funds that are not used to purchase a home can be transferred to an RRSP or RRIF account on a rollover basis, and the RRSP/RRIF rules will apply going forward.  It is also important to note that the transfer will not impact your RRSP contribution limits.

Over-contributions are subject to a 1% per month penalty on the overage until it is eliminated.

The Bottom Line

The creation of a new registered account provides Canadians with another tool to avoid or delay income tax while achieving the goal of home ownership.  The plan is simple, but the use and administration of it is more complex.

Additionally, integrating a new FHSA with your existing registered plans across your entire family requires careful consideration and planning to maximize the tax and savings advantages.

If you would like a personal consultation, please contact Winnie at to set up an appointment with Kari to help you remain objective and focused on your future goals, while planning for a healthy financial future.

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This information is designed to educate and inform you of financial strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.