FHSA (First Home Savings Account)
Quick Definition
A new registered account combining RRSP and TFSA benefits specifically for first-time home buyers.
Full Explanation
The First Home Savings Account (FHSA) launched in Canada on April 1, 2023. It allows first-time home buyers to save up to $40,000 (lifetime) for a home purchase with tax-deductible contributions (like an RRSP) and tax-free withdrawals for a qualifying home purchase (like a TFSA). Annual contribution limit is $8,000. Unused contribution room carries forward (up to $8,000 max carryforward). The account must be opened by age 71 and must be used within 15 years of opening. You can also combine FHSA with HBP for a total of $75,000 in tax-advantaged savings.
Related Terms
RRSP (Registered Retirement Savings Plan)
A tax-deferred savings account for retirement, with deductible contributions.
TFSA (Tax-Free Savings Account)
A flexible registered account where investment growth and withdrawals are completely tax-free.
First-Time Home Buyer
A buyer who has not owned a home in the last 4 years, qualifying for special programs.
Home Buyers' Plan (HBP)
Allows first-time buyers to withdraw up to $35,000 from their RRSP tax-free for a home purchase.
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