Introduced in April 2023, the First Home Savings Account was designed specifically for Canadians who haven’t owned a home. Contributions reduce your taxable income like an RRSP. Qualifying withdrawals are completely tax-free like a TFSA. You get both benefits in one account. There is no other registered account in Canada that works this way, and if you’re planning to buy a home, not opening one immediately is leaving money on the table.
Most employees don’t fully understand how their DPSP fits into their broader financial plan. Let’s take a look together.
The 15-year clock starts from the first year you open the account, not the first year you contribute. Opening an FHSA immediately starts the clock and locks in your eligibility window. You can open an account and contribute whenever you’re ready.
If you end up not purchasing a home (or never meet the first-time buyer criteria), your FHSA funds can be transferred directly to your RRSP or RRIF with no tax consequences and without using RRSP contribution room. You lose nothing.
Unused annual room carries forward, but only one year’s worth at a time. If you contribute nothing in Year 1, you can contribute up to $16,000 in Year 2 ($8,000 current + $8,000 carry-forward). Years beyond that don’t continue to carry forward, so staying regular helps maximize the account.
You’re considered a first-time buyer if you haven’t owned a qualifying home in the current calendar year or in any of the four preceding calendar years. A qualifying home is a property in Canada that you intend to occupy as your principal residence. Notably, if you owned a home years ago but have been renting since, you may qualify again.
No, unlike an RRSP, you can’t contribute directly to your spouse’s FHSA. However, you can give your spouse money to contribute to their own FHSA, which achieves the same result without attribution rules applying.
If you don’t buy a qualifying home within the 15-year account window (or by age 71), the FHSA must be closed. Funds can be transferred to your RRSP or RRIF without using contribution room and without immediate tax consequences. If withdrawn as cash instead, the amount is taxable as income that year.
No. Like the RRSP, you can carry forward unused FHSA deductions to a future year. This can be a useful strategy if your income is expected to be higher in coming years, contribute now, but claim the deduction when it saves you more tax.
The sooner you open it, the more room you accumulate. Let’s build your home-buying strategy around the best tools available.
Manjit Singh Sandhu · Financial Advisor
