First Home Savings Account: limits and qualifying withdrawal basics
FHSA participation room is $8,000 in the first year you open an account. A qualifying withdrawal for a first home is tax-free and does not have to be repaid.
- First-year annual FHSA limit
- $8,000 in the year the holder opens their first FHSA. Unused room can be carried forward to a later year, but the amount carried forward is capped at $8,000.CRA, FHSA annual limit
- Lifetime FHSA limit
- $40,000 is the starting amount in the remaining lifetime limit calculation. Contributions, RRSP transfers and CRA-defined adjustments affect remaining room.CRA, FHSA participation room
- Qualifying withdrawal
- Tax-free and not required to be repaid, when made for a qualifying first home by an eligible first-time home buyer who meets all conditions.CRA, FHSA qualifying withdrawal
First-year room and the adjusted lifetime limit
The First Home Savings Account is a registered account introduced to help first-time home buyers save for a qualifying home. In the year a holder opens their first FHSA, the annual contribution limit is $8,000. Contributions to an FHSA are generally deductible from taxable income, similar to an RRSP, and investment earnings inside the account grow tax-free. CRA, FHSA annual limit (opens in a new tab)
The remaining lifetime FHSA limit calculation starts with $40,000, subtracts prior contributions and RRSP transfers, and includes adjustments for designated amounts, taxable withdrawals, re-participation room and excess amounts. Later-year participation room also accounts for unused re-participation room, carryforward capped at $8,000, and prior-year excess amounts. The simple annual-plus-carryforward formula does not cover every situation. CRA, FHSA participation room calculation (opens in a new tab).
A person who contributes $8,000 in the first year has $32,000 of lifetime room remaining, with no transfers or other adjustments.
A qualifying withdrawal from an FHSA for a first home is not taxed and does not have to be repaid. The conditions for a qualifying withdrawal include: the holder must be a first-time home buyer as defined by the FHSA rules, must have a written agreement to buy or build a qualifying home with a completion date before October 1 of the year after the withdrawal, and must intend to occupy the home as a principal residence within one year of acquiring it. CRA, FHSA qualifying withdrawal conditions (opens in a new tab)
A non-qualifying withdrawal is taxable
A withdrawal from an FHSA that does not meet the qualifying withdrawal conditions is a taxable withdrawal. The withdrawn amount must be included as income on the holder's tax return for the year the withdrawal is made. This is the key distinction from a qualifying withdrawal, which is tax-free and does not affect the taxable income for that year. CRA, FHSA taxable withdrawals (opens in a new tab)
Contributing more than the annual or lifetime FHSA limit results in an excess FHSA amount. Excess contributions attract a 1% penalty per month. This is a tax imposed under the Income Tax Act and assessed by the CRA. Excess is measured as total contributions plus any amounts transferred from an RRSP that exceed the holder's participation room. CRA, FHSA excess contributions (opens in a new tab)
The CRA account shows FHSA participation room calculations for the years after the first FHSA is opened. CRA, Contributing to your FHSA (opens in a new tab).
This page is an original explanation of CRA material and does not imply CRA endorsement. FHSA rules are separate from the TFSA, the RRSP, the Home Buyers' Plan, and the Lifelong Learning Plan, each of which has its own conditions.