Uniquely Canadian (shelter)

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  By Guest Blogger Sinan Terzioglu

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Since the First Home Savings Account (FHSA) was introduced in 2023, I’ve received many questions from prospective homebuyers looking to take advantage of this valuable and uniquely Canadian planning opportunity. While the basic benefits of the FHSA are straightforward, some of the eligibility and withdrawal rules are less intuitive.

Understanding these nuances is important, as a misunderstanding can prevent an individual from making a qualifying tax-free withdrawal. Before examining some common questions and recent CRA interpretations, let’s review the key features of the FHSA.

The FHSA is a registered savings plan that combines some of the best features of both the RRSP and TFSA. Eligible Canadians can contribute up to $8,000 per year, to a lifetime maximum of $40,000. Contributions are tax-deductible, investments grow tax-free within the account, and qualifying withdrawals used to purchase a first home are completely tax-free.

Funding an FHSA can be done with cash, by transferring eligible investments in-kind from a non-registered account, or through a direct transfer from an RRSP. However, only cash contributions and in-kind transfers from non-registered accounts generate a new tax deduction, so RRSP transfers are generally best used when no other funding sources are available.

Another valuable feature is that FHSA deductions, like RRSP deductions, can be carried forward and claimed in a future year. This flexibility may be particularly beneficial for individuals who expect to be in a higher tax bracket down the road.

To qualify, an individual must be a Canadian resident, at least 18 years old, and meet the definition of a first-time homebuyer. Generally, this means neither the individual nor their spouse or common-law partner has owned and occupied a principal residence during the year the FHSA is opened or during the previous four calendar years.

FHSA funds can be withdrawn tax-free to purchase a qualifying home, provided the withdrawal is made no later than 30 days after taking possession of the property. In addition, FHSA withdrawals can be used alongside withdrawals of up to $60,000 per person from an RRSP under the Home Buyers’ Plan, allowing first-time homebuyers to leverage both programs when funding a home purchase.

FHSAs can remain open for up to 15 years or until the end of the year the holder turns 71. If the funds are not ultimately used to purchase a qualifying home, they can be transferred to an RRSP or RRIF on a tax-deferred basis. As a result, FHSAs can provide up to $40,000 of additional registered retirement savings room while allowing years of tax-sheltered growth. For that reason, even individuals who believe they may never purchase a home can often benefit from opening and contributing to an FHSA.

When a Spouse Already Owns a Home

One of the most common questions I receive concerns situations where a spouse or common-law partner already owns a home.

Example: Mark, who had never owned a home, opened an FHSA in September 2025 and contributed $8,000. He made another $8,000 contribution in March 2026. In June 2026, Mark married Sarah and moved into the home she had owned and occupied as her principal residence since 2024, although Mark was not listed as an owner. The following month, Mark and Sarah entered into an agreement to purchase a qualifying home together, with possession scheduled for September 2026.

Mark’s situation highlights an important nuance in the FHSA rules. He was eligible to open and contribute to an FHSA because he had never owned a home and was not living in a home owned by a spouse or common-law partner when the account was established. Although he later married Sarah and moved into her home, this does not invalidate his FHSA. CRA commentary has indicated that an individual who properly established an FHSA may still be able to make a qualifying tax-free withdrawal to purchase a new home even if they later reside in a home owned by their spouse or common-law partner. As a result, Mark may still use his FHSA funds tax-free toward the purchase of the couple’s new home.

Parent on Title for Mortgage Qualification

Parents often assist their children with mortgage qualification by being added to title, which raises an important question: can the child still make a qualifying FHSA withdrawal?

Example: Emily purchases her first home and intends to live in it as her principal residence. Her father is added to title solely because the lender requires an additional borrower to help qualify for the mortgage. Emily provides the down payment, makes the mortgage payments, and bears the benefits and risks of ownership. In this situation, Emily may still be eligible to make a qualifying tax-free FHSA withdrawal, provided she is considered the beneficial owner of the property and meets all other FHSA requirements.

The CRA has indicated that a qualifying home purchase can still occur when a parent is added to title solely to assist with financing. The key consideration is not whose name appears on legal title, but rather who is the true beneficial owner of the home and who intends to occupy it as their principal residence.

Moving Into a Rental Property You Already Own

Another frequently asked question is whether moving into a rental property that you already own allows you to make a tax-free FHSA withdrawal.

Example: Jason purchased a rental property in 2021 and rented it to tenants while continuing to live in a rented residence himself. In 2026, after the tenants moved out, he decided to move into the property and make it his principal residence. Jason believed he should be able to make a tax-free FHSA withdrawal at that time. However, the CRA’s position is that he acquired the property when he originally purchased it in 2021.

At first glance, it seems reasonable to think Jason should qualify because he has never lived in a home that he owned. However, the issue is not whether he previously occupied the property, but whether he is acquiring a qualifying home. According to the CRA, converting a rental property into a principal residence does not create a new acquisition for FHSA purposes. Instead, Jason is considered to have acquired the property when he originally purchased it in 2021.

In summary, the FHSA remains one of the most powerful savings vehicles available to Canadians, combining tax-deductible contributions, tax-free growth, and tax-free withdrawals for a qualifying first home purchase. As the examples above demonstrate, however, qualifying for a tax-free withdrawal is not always as straightforward as it may appear. Whether the situation involves a spouse who already owns a home, a parent being added to title to assist with mortgage qualification, or the conversion of a rental property into a principal residence, the outcome often depends on the specific facts and the application of CRA rules. Taking the time to understand these nuances can help avoid costly mistakes and ensure that FHSA funds remain available for their intended purpose when the time comes to purchase a home.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

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About the picture: Yeah, that’s Cody feeling patriotic. The big flag was a gift to me from the CEO of Raymond James after my prized Peace Tower flag was stolen by Indigenous sympathizers on this day in 2021. It had adorned my wee bank building in Lunenburg, when the residential schools unmarked-graves issue erupted. In an emotional pandemic world, it became a sign of colonial arrogance to display the nation’s banner. But not for me. So I paid a price for pride. And would again. – Garth

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