FHSA Rules 2026: Contribution Room, Withdrawals and the $40,000 Limit
The First Home Savings Account gives first-time buyers a tax deduction going in and a tax-free withdrawal coming out. The catch is in the details: room only starts when you open the account, carryforward is capped, and the withdrawal has strict timing rules.
- Rules checked October 31, 2026
- By Krish Paul
- 9 min read
On this page
This guide covers who can open one, how your room is calculated, how the deduction works and what it takes to make a tax-free withdrawal for a home.
The short answer
If you are an adult Canadian resident, 71 or younger at the end of the year, and you have not lived in a home you or your spouse owned this year or in the last four calendar years, you can open an FHSA. You can put in $8,000 a year, carry up to $8,000 of unused room forward, and put in $40,000 over your lifetime. Contributions are deductible, and a qualifying withdrawal to buy your first home is tax-free and never repaid.
These rules come from the CRA’s FHSA pages and section 146.6 of the Income Tax Act. No change to the FHSA rules had been announced as of October 31, 2026. The federal government has said Budget 2026 will be released on November 5, 2026, so check back after that date.
Who can open an FHSA
The CRA says you must meet all of these conditions on the day you open the account:
- You are a resident of Canada.
- You are at least 18. In provinces and territories where the age to sign a contract is 19, you need to be 19.
- You are 71 or younger on December 31 of the year you open it.
- You are a first-time home buyer. You did not live in a home you owned or jointly owned as your main residence at any time this calendar year or in the previous four calendar years.
- Your spouse or common-law partner passes the same test, or you do not have one. If you live in a home your partner owns, you cannot open an FHSA.
You can open an FHSA at a bank, credit union or other issuer. In the year you open your first FHSA, you must file Schedule 15 with your tax return, even if you put nothing in.
How much you can put in: participation room
Your room is the most you can contribute, plus transfer in from your RRSPs, in a year without going over. The CRA’s rules work like this:
- First year: $8,000, in the year you open your first FHSA.
- Later years: $8,000, plus unused room carried forward from the year before.
- Carryforward cap: no more than $8,000 carries into the next year.
- Lifetime cap: $40,000 of contributions and RRSP transfers in total.
So the most you can ever put in during one year is $16,000. Investment growth inside the account does not count against your room. The room is shared across all your FHSAs if you have more than one.
Why opening early matters
Room does not build up before you have an account. The carryforward in your first year is $0. The CRA gives the example of someone who opened an FHSA in June 2026, put nothing in, and had $16,000 of room for 2027. If they had waited until 2027 to open it, they would have had $8,000.
Whatever you leave unused in 2026, up to $8,000, is added to your 2027 room. Put in $3,000 in 2026 and your 2027 room is $13,000. Put in the full $8,000 and it is $8,000.
A worked example: $5,000 a year
Say you open your first FHSA in 2026 and put in $5,000 every year. Here is how your room moves, using the CRA formula and assuming no RRSP transfers or withdrawals.
| Year | Carried forward | Room that year | You put in | Total put in |
|---|---|---|---|---|
| 2026 | $0 | $8,000 | $5,000 | $5,000 |
| 2027 | $3,000 | $11,000 | $5,000 | $10,000 |
| 2028 | $6,000 | $14,000 | $5,000 | $15,000 |
| 2029 | $8,000 | $16,000 | $5,000 | $20,000 |
| 2030 | $8,000 | $16,000 | $5,000 | $25,000 |
| 2031 | $8,000 | $15,000 | $5,000 | $30,000 |
| 2032 | $8,000 | $10,000 | $5,000 | $35,000 |
| 2033 | $8,000 | $5,000 | $5,000 | $40,000 |
Hypothetical example, calculated by Gizly with the CRA participation room formula. The carryforward reaches the $8,000 cap in 2029. From 2031, the $40,000 lifetime cap limits your room.
By 2029 your unused room is more than the carryforward can hold, so you could not catch up all at once. At $5,000 a year you reach $40,000 in 2033. At $8,000 a year you would reach it in 2030.
The tax deduction
FHSA contributions are generally deductible, much like RRSP contributions. A few rules are different:
- No 60-day rule. Contributions made in the first 60 days of the year cannot be deducted on the previous year’s return. The contribution period is January 1 to December 31.
- You can wait to deduct. Contributions you do not deduct carry forward, even after your FHSAs are closed. That can make sense if you expect a higher income later.
- RRSP transfers are not deductible. You already got a deduction when the money went into the RRSP.
- Some contributions are never deductible. This includes anything you put in after your first qualifying withdrawal and anything over the $40,000 lifetime limit.
The CRA example: someone contributed $8,000 in 2025 and did not deduct it, then contributed $5,000 in 2026. They could claim $13,000 on their 2026 return. You claim the deduction on line 20805 using Schedule 15. Your issuer sends a T4FHSA slip with the year’s totals.
Using the money to buy a home
A qualifying withdrawal is not taxed and is never repaid. You must meet every condition at the time you withdraw:
- You are a first-time home buyer. For a withdrawal, the test ignores the 30 days just before it.
- You have a written agreement to buy or build a home in Canada, to be completed before October 1 of the year after the withdrawal.
- You did not acquire the home more than 30 days before the withdrawal.
- You intend to live in it as your main residence within one year of buying or building it.
- You stay a Canadian resident from the first withdrawal until you acquire the home.
- You fill out Form RC725 and give it to your FHSA issuer.
There is no minimum time money must sit in the account before you withdraw it. If two of you are buying together, each can withdraw from your own FHSA if you each meet the conditions.
| Date | What happens |
|---|---|
| July 2027 | Sign a written purchase agreement, send the request form, withdraw |
| Before October 1, 2028 | The purchase or construction must be complete |
| Within one year of buying | Live in the home as your principal residence, or intend to |
| December 31, 2028 | Last day to close all your FHSAs |
Hypothetical dates based on the CRA withdrawal and closing rules. The closing deadline is December 31 of the year after your first qualifying withdrawal.
If a condition is not met when you withdraw, the CRA treats it as a taxable withdrawal. A qualifying withdrawal also cannot be cancelled once it is made.
FHSA and the Home Buyers’ Plan together
You can use both for the same home. The Home Buyers’ Plan lets you take up to $60,000 out of your RRSPs, but you have to pay it back. For a first HBP withdrawal made between January 1, 2026 and December 31, 2028, repayments start in the fifth year after the withdrawal. For example, a first withdrawal in 2026 means your first repayment year is 2031.
| Rule | FHSA | Home Buyers’ Plan (RRSP) |
|---|---|---|
| Most you can take out | Your full balance | $60,000 |
| Contributions deductible | Yes, up to $40,000 in a lifetime | Yes, as RRSP contributions |
| Pay it back | No | Yes, over 15 years |
| Same home allowed | Yes, if you meet both sets of rules | Yes, if you meet both sets of rules |
If you do not buy a home
An FHSA has a time limit. Your maximum participation period ends on December 31 of the year of the earliest of these events:
- the 15th anniversary of opening your first FHSA;
- the year you turn 71;
- the year after your first qualifying withdrawal.
If you open your first FHSA in 2026 and never buy, your period ends December 31, 2041, unless you turn 71 sooner. Before then you can transfer the money directly to your RRSP or RRIF with no immediate tax. The CRA says this generally does not affect your unused RRSP deduction room. You can also withdraw it as cash, but then it is added to your income and tax is withheld.
Anything still in an FHSA when the period ends loses its FHSA status. Its value on December 31 is added to your income for that year.
Mistakes that cost FHSA holders money
- Over-contributingGoing over your room costs 1% a month on the highest excess in each month. The CRA example: a $2,000 excess in November and December 2025 cost $40.
- Counting on January contributionsA contribution made in the first 60 days of the year only counts for that year, not the one before.
- Moving money from a TFSADirect transfers in can only come from an RRSP or another FHSA. TFSA money has to come out and go in as a new contribution.
- Forgetting to close the accountAfter buying, close your FHSAs by December 31 of the year after your first qualifying withdrawal.
RRSP transfers also need care. A direct transfer from your RRSP uses your FHSA room, is not deductible, and does not give you back RRSP room. A spousal RRSP transfer is blocked if your partner contributed to any spousal RRSP that year or in the two years before.
How to open and use an FHSA
- Check you qualify. Go through the five conditions above, including your partner’s home ownership.
- Open the account early. Even with $0 in it, opening starts your room.
- File Schedule 15. Do this with your return for the year you open it, even if you made no contributions.
- Track your room. Your notice of assessment shows your FHSA room for the next year. Keep your own record if you have FHSAs at more than one issuer.
- Decide when to deduct. Claim contributions on line 20805 now, or carry them forward to a higher-income year.
- When you buy, fill out Form RC725. Give it to your issuer once you have a written purchase agreement, then close your FHSAs by the deadline.
If a T4FHSA slip looks wrong, ask your issuer to correct it before you file. If you go over your room, remove the excess or wait for new room on January 1, and file Form RC728 for the tax owing.
Related: CMHC insurance premiums by down payment and how to start investing in Canada.
Frequently asked questions
How much can I put in an FHSA in 2026?
If you open your first FHSA in 2026, your room for 2026 is $8,000. If you opened one earlier, your 2026 room is $8,000 plus up to $8,000 of unused room carried from the year before, so it can be as high as $16,000. Your lifetime limit on contributions and RRSP transfers is $40,000.
Does FHSA room build up before I open an account?
No. Room starts in the year you open your first FHSA. The carryforward is $0 in that first year, so opening an account early, even with nothing in it, is what starts your room.
Can I use the FHSA and the Home Buyers’ Plan for the same home?
Yes. The CRA says you can make a qualifying FHSA withdrawal and an HBP withdrawal from your RRSPs for the same qualifying home, as long as you meet the conditions for each at the time of each withdrawal. FHSA withdrawals are not repaid. HBP withdrawals are.
What happens to my FHSA if I never buy a home?
You can transfer the money directly to your RRSP or RRIF with no immediate tax, and the transfer generally does not affect your RRSP deduction room. If you take the money out in cash instead, it is added to your income. Anything left when your maximum participation period ends loses its FHSA status and is taxed as income.
Can I deduct an FHSA contribution made early in the year on last year’s return?
No. Unlike an RRSP, contributions made in the first 60 days of the year cannot be deducted on the previous year’s return. The FHSA contribution period is January 1 to December 31.
What is the penalty for putting too much in an FHSA?
The CRA charges a tax of 1% per month on the highest excess amount in each month until the excess is gone. You also have to file Form RC728. New room on January 1, or removing the excess, reduces or ends it.
- Sources, checked October 31, 2026: CRA: First Home Savings Account (modified 2026-02-02); CRA: Opening your FHSAs (modified 2026-02-10); CRA: Participating in your FHSAs (modified 2026-09-17); CRA: Tax deductions for FHSA contributions (modified 2026-04-15); CRA: Line 20805, FHSA deduction (modified 2026-06-16); CRA: Withdrawals and transfers out of your FHSAs (modified 2026-02-10); CRA: Transfers into your FHSAs (modified 2026-08-17); CRA: Closing your FHSAs (modified 2026-02-02); CRA: Contributing or transferring too much (modified 2026-02-02); CRA: Form RC725 (modified 2026-03-02); CRA: Home Buyers’ Plan (modified 2026-02-17); Income Tax Act, section 146.6 (current to 2026-09-30); Finance Canada: Budget 2026 release date (October 20, 2026).
- Method: Room figures in the table and chart were calculated by script with the CRA participation room and carryforward formulas, assuming no RRSP transfers, withdrawals, designated amounts or excess. The script was checked a second way with a simpler recursive formula and by reproducing the CRA’s own example of $16,000 of 2027 room after an unused 2026 opening year.
Important: This guide is general information, not financial, tax or legal advice. Your own room is the figure the CRA shows on your notice of assessment. Gizly is not affiliated with the Government of Canada and is not paid by any FHSA issuer. See our affiliate disclosure.
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