FHSA rules for first-home buyers

The First Home Savings Account is the specialist registered account for a first home in Canada. Contributions are generally deductible. Growth is tax-free inside the plan. A qualifying withdrawal is tax-free and not repaid. This article is the FHSA rules Canada uses for first-home buyers in 2026 — room, the two first-time tests, withdrawals, transfers, and what happens if you never buy. If you are still deciding whether the next dollar belongs in a TFSA, an RRSP, or an FHSA, start with the 2026 which-to-fund-first guide and come back here for the FHSA mechanics.

Participation room, carry-forward, and the $40,000 lifetime cap

In the year you open your first FHSA, participation room is $8,000. That $8,000 is the combined cap for contributions and transfers from your RRSP. Later years are $8,000 plus carry-forward — and the carry-forward itself is capped at $8,000. You cannot stack unused room above that cap.

Over your lifetime, the most you can deduct as an FHSA deduction is $40,000. Transfers from your RRSPs to your FHSAs reduce remaining lifetime deduction room even though those transfers are not deductible. CRA’s own example: $8,000 in each of 2025 through 2029 reaches the $40,000 lifetime ceiling; a further $5,000 in 2030 is excess and not deductible.

Income earned inside the FHSA does not use participation room. Growth is not subject to the $40,000 contribution cap, so a qualifying withdrawal can be larger than $40,000 if the investments grew. Confirm your own room from your participation-room statement and Schedule 15.

Open the account to start the clock

Room starts only when you open your first FHSA — not when you become eligible, and not for years you waited. There is no retroactive 2023–2025 room. Opening with $0 still starts the year. After you file Schedule 15, even with $0 activity, unused room can carry forward.

In the year you open, carry-forward is $0. In later years it is the lesser of $8,000 and unused room from the prior year.

CRA’s Wendy example: she opened in 2025, contributed $0, and filed Schedule 15. Her 2026 participation room is $16,000 — $8,000 new plus $8,000 carry-forward. If you open in 2026, first-year room is $8,000. CRA’s Vivi example: she used $6,000 of $8,000 in 2025, so 2026 carry-forward is $2,000.

The maximum participation period also starts at opening, not the first deposit.

Who can open an FHSA

You need all of the following when you open the account:

• Age: 18 or older, or the provincial or territorial age of majority if that is 19; and 71 or younger as of 31 December of the year you open.

Provincial age of majority. CRA lets you open at 18, or at the provincial or territorial age of majority if that is 19. In a majority-at-19 province you wait to enter the contract, then you may open. The 71-or-younger-at-year-end rule still applies. Confirm on the CRA opening page.

• Residency: resident of Canada.
• Opening first-time test: you did not live in a qualifying home (or what would be one if it were in Canada) as your principal place of residence that you owned or jointly owned in this calendar year or the previous four calendar years; and either you have no spouse or common-law partner, or you did not live in such a home that they owned or jointly owned in that same window.

A qualifying home is a housing unit in Canada — a house, semi, townhouse, mobile home, condo, apartment in a multiplex or apartment building, or a co-op share that gives an equity interest. A tenancy-only co-op share does not qualify.

You do not need earned income to open or contribute. You cannot open an FHSA after your maximum participation period ends.

CRA’s examples: if you owned a home from 2021 through 2024, you are not a first-time buyer for opening purposes until at least 2029. If you live in a home owned by your common-law partner, you cannot open.

Two first-time home buyer tests

“First-time home buyer” for opening an FHSA is not the same test as for a qualifying withdrawal. Spouse or common-law partner ownership is treated differently on each one. Use the CRA opening page and the withdrawals page, not a shortcut. The Home Buyers’ Plan has its own first-time test as well.

Meet each program’s conditions. Do not blend them.

Contributions are deductible — calendar year only

Contributions are generally deductible on your return for the year of the contribution or a future year. Transfers from your RRSP to your FHSA are not deductible.

The contribution period is 1 January to 31 December of the same year. There is no 60-day lookback to the previous tax year. A January 2026 FHSA contribution is a 2026 deduction, not a 2025 one. CRA’s important-dates page is explicit: if you opened in 2025, you can claim up to $8,000 of contributions made by 31 December 2025 on the 2025 return.

Also not deductible: contributions after your first qualifying withdrawal; designated excess withdrawals; amounts over the $40,000 lifetime limit; investment losses; administration or brokerage fees; interest on money borrowed to contribute.

File Schedule 15 for the year you open your first FHSA, even with $0 activity. You can contribute now and deduct later, inside the lifetime ceiling. For the RRSP version of that timing, see RRSP deduction and refund planning. Do not treat an $8,000 contribution as a guaranteed refund of a set dollar amount — the value is your own marginal rate, which CRA does not publish as one national figure.

Qualifying withdrawals: tax-free and not repaid

While money sits in the FHSA, income is tax-free. A qualifying withdrawal for a first home — all conditions met — is not included in income and is not repaid. It can be one withdrawal or a series. There is no minimum holding period. A qualifying withdrawal cannot be cancelled.

All of these are required:

• you meet the withdrawal first-time home buyer test (table above)
• you have a written agreement to buy or build, with acquisition or completion before 1 October of the year after the withdrawal
• you have not acquired the home more than 30 days before the withdrawal
• you are a resident of Canada from the first qualifying withdrawal until the earlier of acquisition or death
• you occupy or intend to occupy the home as your principal residence within one year
• you file Form RC725

Any other withdrawal is a taxable withdrawal: included in income, withholding applies. Qualifying withdrawals do not restore participation room and do not clear an excess. If you later put a qualifying withdrawal back in, that is a new contribution — it may create excess, and it is not deductible. After your first qualifying withdrawal, further FHSA contributions are not deductible.

Two eligible spouses or common-law partners can each make a qualifying withdrawal from their own FHSA for the same home if each person meets the conditions.

Stack the Home Buyers’ Plan on the same home

You can withdraw from an RRSP under the Home Buyers’ Plan — currently up to $60,000 — and make a qualifying FHSA withdrawal for the same qualifying home, if you meet each program’s conditions at the time of each withdrawal.

HBP money is repaid over 15 years. For a first HBP withdrawal between 1 January 2026 and 31 December 2028, that 15-year clock starts in the fifth year after the withdrawal year. Illustrative, following CRA’s rule: first withdrawal in 2026 → first repayment year 2031.

Two eligible spouses can each use their own FHSA and, if eligible, their own HBP. Only the HBP side is repaid.

If you never buy — and when the clock ends

The maximum participation period ends 31 December of the year of the earliest of:

• the 15th anniversary of opening your first FHSA
• the year you turn 71
• the year after the first qualifying withdrawal

The clock runs from opening, not the first deposit. CRA’s example: opened August 2025, never bought, first contribution in 2028 — the period still ends 31 December 2040. Close every FHSA on or before that 31 December.

You are not forced to withdraw if you never buy. Before the period ends you should either:

1. Directly transfer remaining property to your RRSP or RRIF (Form RC721) — no immediate tax and does not use RRSP deduction room if there is no excess; the money then follows normal RRSP or RRIF rules; or
2. Withdraw — taxable in the year you receive it.

Do neither, and on 31 December of the end year the account ceases to be an FHSA and the year-end fair market value is income (T4FHSA box 26). Unused deductions can generally still be claimed in a later year after the account is closed, subject to the $40,000 lifetime ceiling and the excess rules.

Transfer traps

Direct RRSP → FHSA (Form RC720): uses FHSA participation room, is not deductible, and does not restore RRSP room. This is not a second deduction.

Direct FHSA → RRSP or RRIF (Form RC721): not immediately taxable if there is no excess, and it does not use RRSP deduction room. If you have an excess, the most you can move without immediate tax is the fair market value of all your FHSAs minus the excess.

There is no direct TFSA ↔ FHSA transfer. TFSA out is generally tax-free (room back next 1 January — TFSA contribution room for 2026); FHSA in is a new contribution. FHSA to TFSA is a taxable withdrawal plus a new TFSA contribution.

Do not DIY these moves with a withdrawal and a fresh deposit. An RRSP withdrawal is income. An FHSA non-qualifying withdrawal is income.

A spousal RRSP cannot move cleanly to your FHSA if your spouse or common-law partner contributed to any spousal RRSP of which you are the annuitant in the transfer year or the two previous calendar years — CRA treats that as a taxable RRSP withdrawal plus a new FHSA contribution.

Over-contribution: 1% a month, no cushion

Any excess FHSA amount is taxed at 1% per month on the highest excess in the month, until you eliminate it. Excess is contributions plus RRSP → FHSA transfers above participation room. There is no $2,000 RRSP-style cushion. New 1 January room can absorb leftover excess; you still owe 1% for the months it existed.

File RC728 and RC728-SCH-A. Ways to remove excess: a designated withdrawal, a designated transfer to an RRSP or RRIF (Form RC727), a taxable withdrawal, or deemed income when the account ceases. If you only contributed, you may designate a withdrawal (not a transfer). If you only transferred from an RRSP, you may designate a transfer (not a withdrawal). Mixed cases have both options, with caps.

A qualifying withdrawal that includes excess does not clear that excess. CRA warns the 1% tax can continue.

Check this year’s participation room in the live FHSA room tool. Start a 30-day free trial to keep the first-home account next to cash and the other registered balances.

This is general information for tax year 2026, not tax advice and not a CRA publication. “First-time home buyer” for opening an FHSA is not the same test as for a qualifying withdrawal — spouse or common-law partner ownership is treated differently. Confirm both on CRA, plus your participation-room statement and Schedule 15.