TFSA vs RRSP vs FHSA
Where to park down-payment savings. FHSA wins for first-time buyers because it stacks the RRSP deduction with the TFSA's tax-free withdrawal — no other account in Canada offers both.
Your scenario
Result
FHSA is capped at $8k/yr and $40k lifetime. Beyond that, use TFSA. RRSP HBP supplements for first-home use without permanent tax.
Why FHSA wins for first-home savings
The First Home Savings Account is the only registered account in Canadian tax law that combines BOTH the RRSP-style deduction (going in) with the TFSA-style tax-free withdrawal (coming out). No other account offers both — that's why this calculator almost always shows FHSA winning.
Worked comparison
$8,000 annual contribution, 35% marginal tax rate, 6% expected return, 8-year horizon:
- FHSA: Tax-deductible going in ($2,800/yr refund × 8 = $22,400 saved), tax-free withdrawal. Net result ≈ $103,000.
- TFSA: After-tax contribution, tax-free growth + withdrawal. Net result ≈ $79,000.
- RRSP: Tax-deductible going in, fully taxed at withdrawal (under HBP, repaid over 15 years; outside HBP, taxed as income). Net for first-home use ≈ $79,000 (similar to TFSA after refund nets out).
FHSA mechanics + contribution rules
- $8,000 per year contribution limit
- $40,000 lifetime contribution limit
- Unused contribution room carries forward up to $8,000 (max $16,000 in any single year)
- Contributions are tax-deductible — claim in any future year for maximum tax savings
- December 31 contribution deadline (NOT the RRSP 60-day window)
- 15-year maximum account life (close at age 71 or 15 years after opening)
Stacking with RRSP HBP
A first-time buyer can use BOTH the FHSA AND the RRSP Home Buyers' Plan simultaneously:
- FHSA: up to $40,000 lifetime (tax-deductible going in, tax-free coming out, no repayment required)
- RRSP HBP: up to $60,000 per person (no permanent tax if repaid; 15-year repayment schedule)
- Combined: up to $100,000 of tax-advantaged first-home down payment per person
- For couples: up to $200,000 combined
What if I'm not buying a first home?
If your home-buying plans change, the FHSA still has options:
- Roll into your RRSP tax-free (doesn't use RRSP contribution room) — preserves the tax-deductible benefit
- Withdraw with full tax on the withdrawal — typically the worst option
- Roll into the spouse's FHSA if eligible
Who qualifies as "first-time buyer" for FHSA
- Canadian resident, 18+ (some provinces require 19)
- You haven't owned a home you lived in during the current calendar year OR the four preceding years
- Your spouse / common-law partner also can't have owned a qualifying home in that window