# FHSA Room and Tax Savings for First Buyers

> Estimate your FHSA room for this year, see how carry-forward works and find the income tax that a deduction saves in your province

You can put $8,000 a year into a First Home Savings Account, and in Ontario with $85,000 of income that deposit cuts your tax by $2,372. Enter your income and account history below to see your room and the saving.

## Who can open an FHSA?

You need to be a Canadian resident, an adult, and no older than 71 at the end of the year you open it. The first-time buyer test is about the past few years: you can't have lived in a home you owned, or one your spouse or partner owned, in the current calendar year or the four before it. The [CRA's page on opening an FHSA](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html) lays out the exact conditions.

## How much room does an FHSA give you?

Think of it as an RRSP and a TFSA rolled together: you get a deduction going in, and the withdrawal is tax-free as long as the money buys a first home. Room builds year by year, and unused room carries forward up to a cap.

| Rule | Amount |
| --- | --- |
| Yearly room | $8,000 |
| Most you can carry forward | $8,000 |
| Largest deposit in a year | $16,000 |
| Lifetime limit | $40,000 |
| Tax on excess deposits | 1% a month |
| Account must close by | The 15th year after opening, or the year you turn 71 |

These rules are set out on the CRA's page on [contributing to your FHSA](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html).

## What does a deposit save you in tax?

Start with an Ontario resident earning $85,000 who opened the account a year ago and has already put in $8,000. Room this year is $8,000, so a planned $8,000 fits in full. The deduction lowers tax by $2,372, and $24,000 of the lifetime limit is left.

Now set the past deposit to zero and keep the one year open. This time $8,000 of unused room carries in, so room is $16,000. Plan $16,000 and the saving is $4,894, with $24,000 of lifetime room left again. Use both years together and the saving roughly doubles. That's the case for catching up.

Spread out, $8,000 is about $667 a month, or roughly $308 from each paycheque if you're paid every two weeks.

## What happens if you skip a year?

One missed year is fine, because carry-forward stops at $8,000 and covers it. Miss two in a row and the older room is gone. Don't let that happen. Put something in every year if you can, since it keeps you on the fastest path to the cap. At the yearly amount the $40,000 lifetime limit takes five years to reach.

## Do you have to claim the deduction right away?

No. Amounts you haven't deducted yet carry forward with no expiry, even after you close the account, which lets you save the claim for a year when your rate is higher. The deduction is limited by your accumulated room and by the lifetime cap. One catch: deposits made in the first 60 days of a year for the prior year don't qualify.

## What makes a withdrawal tax-free?

The money has to go toward a qualifying home. You need a written agreement to buy or build one, with the purchase or completion date before October 1 of the year after the withdrawal, and you have to move in, or plan to, within a year of buying or building. Take money out for any other reason and it's taxable income in the year you receive it.

## Mistakes and limits

The calculator assumes each full year of the account added $8,000 of room, and it counts only the years you type in. Get that field wrong and the mistake runs straight through to your room, so double-check it. Transfers from an RRSP earn no deduction and they use up lifetime room. The CRA's own wording is short:

Transfers from your RRSPs to your FHSAs are not deductible.

First home savings account (FHSA), [canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html)
The tax saving rests on your income alone, so a spouse's income or other credits aren't part of it, and it's not a full tax return. Your official room figure is on your notice of assessment, so use that if it differs from the result.

## What else should you plan for?

A home purchase brings other costs, such as tax on the transfer, which the [land transfer tax calculator](https://tax-services.ca/calculators/property-transfer-tax/land-transfer-tax) works out. You can compare the deduction with a regular retirement account in the [RRSP tax savings calculator](https://tax-services.ca/calculators/rrsp-retirement/rrsp-calculator). If you also want room in a tax-free account without a deduction, see the [TFSA calculator](https://tax-services.ca/calculators/rrsp-retirement/tfsa-calculator). To plan the cash for the purchase itself, use the [down payment calculator](https://tax-services.ca/calculators/mortgage/down-payment).

## Where we got these figures

Limits and deduction rules come from the federal pages on the First Home Savings Account. Tax rates are the 2026 federal and provincial tables built into the site. Results are estimates, and this website has no tie to any government body.

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Source: https://tax-services.ca/calculators/rrsp-retirement/fhsa-calculator
Last updated: 2026-10-09
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer