The First Home Savings Account (FHSA) was introduced by the federal government in 2023 and has quickly become the preferred savings vehicle for first-time buyers across Canada. For Montreal buyers facing rising property prices, understanding and maximizing the FHSA is a strategic imperative.
What the FHSA Is
The FHSA is a registered account that combines the best features of an RRSP and a TFSA specifically for the purpose of saving for a first home. Contributions are tax-deductible (reducing your taxable income for the year of contribution), and qualifying withdrawals for a home purchase are completely tax-free. The combination is unique - no other savings vehicle offers both benefits simultaneously.
Contribution Limits
- Annual limit: $8,000 per year
- Lifetime limit: $40,000 per account holder
- Unused contribution room carries forward one year only
- Both partners in a couple can each open an FHSA, contributing a combined $80,000 lifetime
Eligibility Rules
To open an FHSA, you must be a Canadian resident, at least 18 years old, and a first-time home buyer - meaning you have not owned a qualifying home in which you lived as your principal residence at any point in the current calendar year or in the preceding four calendar years.
How It Works for Montreal Buyers
Consider a buyer who opens an FHSA today and contributes $8,000 per year for five years. That is $40,000 in contributions, all tax-deductible (returning roughly $1,200–$2,400 per year in tax refunds depending on your bracket), plus any investment growth within the account - also tax-free on withdrawal.
Combined with a partner's FHSA and the RRSP Home Buyers' Plan ($35,000 per person), a first-time buyer couple in Montreal could access $150,000 or more in tax-sheltered funds for their down payment.
Opening an FHSA Now, Even If You Are Years Away
The FHSA begins accumulating contribution room from the year it is opened, not the year contributions are made. Opening an account today - even with a small initial deposit - preserves your future contribution room. If you expect to buy a property within the next 3–7 years, opening an FHSA immediately is one of the highest-return financial decisions you can make.