FHSA rules — the hybrid RRSP/TFSA for first-time home buyers
First home savings accounts
Section 146.6 governs First Home Savings Accounts (FHSAs), introduced in 2023. Contributions are deductible like an RRSP; qualifying withdrawals to buy a first home are tax-free like a TFSA.
Plain-language explanation
The FHSA launched April 1, 2023, as a new registered account specifically designed to help Canadians save for their first home.
The FHSA combines RRSP and TFSA features: - RRSP side: Contributions (up to $8,000/year) are deductible — they reduce your taxable income. - TFSA side: Investment income grows tax-free, and qualifying withdrawals to buy a first home are completely tax-free.
Limits: - Annual: $8,000 - Lifetime: $40,000 - Unused room carries forward by 1 year only (not indefinitely like an RRSP)
Qualifying withdrawal: To withdraw tax-free, you must: 1. Be a first-time home buyer (not owned a home as your principal residence in the current or preceding 4 calendar years) 2. Have a written agreement to buy or build a qualifying home in Canada before October 1 of the year following withdrawal 3. Intend to occupy the home as your principal residence within 1 year
If you don't buy a home: Transfer the FHSA balance to your RRSP (without affecting your RRSP room) or RRIF — the transfer is tax-free. The account must be closed within 1 year of the first qualifying withdrawal or by December 31 of the 15th year after opening.
Example
Juno opens an FHSA in 2025 and contributes $8,000 (deducted from 2025 income). In 2026, she contributes another $8,000 plus the $8,000 unused 2025 carryforward she didn't contribute — total $16,000 in 2026 (limited to $8,000 current + $8,000 carried). She later uses the full balance for a down payment — all withdrawals are tax-free.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
FHSA program launched — new registered account type created under s.146.6.
Before
Not available
After
$8,000/year deductible contributions; tax-free qualifying withdrawals
Common questions
What is the FHSA contribution limit? +
$8,000 per year with a lifetime maximum of $40,000. Unused annual contribution room carries forward by one year (so if you open an account but contribute nothing in Year 1, you can contribute $16,000 in Year 2).
Can I use both an FHSA and the RRSP Home Buyers' Plan? +
Yes. You can use an FHSA withdrawal and an HBP RRSP withdrawal on the same home purchase. The FHSA withdrawal is never repaid; the HBP withdrawal must be repaid over 15 years.
What happens to my FHSA if I never buy a home? +
You can transfer the balance to your RRSP or RRIF tax-free (without affecting RRSP contribution room). The FHSA must be closed by December 31 of the 15th anniversary of opening or by the end of the year you turn 71.
Key terms
Related sections
Related guides
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 146.6. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.