FHSA: One Year In — The Mistakes New Account Holders Are Making

Key takeaways

• FHSA contributions in the first year are only deductible in that year or carried forward — they do not create prior-year room
• You must open an FHSA before December 31 to create contribution room for that year
• Unused annual FHSA room ($8,000) carries forward one year only
• Both the FHSA and RRSP Home Buyers' Plan can be used for the same home purchase
• If you do not buy a home within 15 years of opening, the FHSA must be transferred to an RRSP or RRIF — tax-free, but the FHSA account closes

The First Home Savings Account has been available since April 2023, but the first year of use has revealed some common misunderstandings about how the room, carry-forwards, and deductions work.

The one-year carry-forward rule

Unlike RRSP room that carries forward indefinitely, unused FHSA annual room ($8,000) carries forward only one year. If you opened your FHSA in 2023 and contributed nothing, you have $16,000 of room available in 2024 — but only $16,000, not $24,000 in 2025. Each year, any unused room from the prior year is added to the new year's $8,000, but that prior year's unused room itself does not carry forward again.

Opening the account early matters

FHSA contribution room is created the year you open the account, not the year you contribute. Opening an FHSA in December — even without contributing — locks in $8,000 of room for that year (plus carry-forward eligibility). Waiting until the new year to open the account wastes a full year of $8,000 room.

Combining FHSA and HBP

A qualifying home purchase using an FHSA can also include a Home Buyers' Plan withdrawal from an RRSP — up to $60,000 — for the same property. This is a major advantage over using HBP alone: FHSA withdrawals are permanently tax-free (no repayment required), whereas HBP withdrawals must be repaid to the RRSP over 15 years or included in income.

If you change your plans

If you no longer plan to buy a first home (or stop qualifying as a first-time buyer), you can transfer the FHSA to an RRSP or RRIF on a tax-free basis. The transfer does not require RRSP contribution room — it is a separate transfer provision. The FHSA must close within one year of any qualifying transfer.