The First Home Savings Account launched in 2023 with unique advantages for first-time buyers. Here is how it compares to the TFSA and which to prioritize.
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Open KOHO Free — Code 45ET55JSYA| Feature | TFSA | FHSA |
|---|---|---|
| Who can open it | Any Canadian resident 18+ | Canadian resident 18+, first-time home buyer* |
| Annual contribution limit | $7,000 (2025) | $8,000 |
| Lifetime limit | $95,000 (cumulative room since 2009) | $40,000 |
| Carry-forward unused room | Yes — unlimited carry-forward | Yes — up to $8,000 carry-forward (1 year only) |
| Tax deduction on contributions | No | Yes — full deduction like RRSP |
| Tax on growth inside account | None | None |
| Tax-free withdrawals for home | Yes — any withdrawal is tax-free | Yes — for qualifying first home purchase |
| Tax on non-home withdrawals | None — withdraw for any reason tax-free | Yes — taxed as income (like RRSP withdrawal) |
| Repayment required after home withdrawal | No | No |
| Account deadline | No deadline | Must use within 15 years of opening, or by Dec 31 of year you turn 71 |
| Transfer option if not used for home | N/A — already flexible | Can transfer to RRSP/RRIF tax-free if not used for home |
| Eligible investments | Same as RRSP — broad eligibility | Same as RRSP — broad eligibility |
*First-time home buyer for FHSA purposes means you have not owned a qualifying home at any time during the current calendar year or the preceding four calendar years.
The FHSA is often described as combining the best features of the TFSA and the RRSP for home buyers. Contributions are tax-deductible (like an RRSP) and qualifying home purchase withdrawals are completely tax-free (like a TFSA). This means you get a tax refund on the way in AND pay no tax on the way out — a "double tax savings" that neither the TFSA nor the RRSP provides on its own.
For someone in a 40% marginal tax bracket contributing $8,000 to an FHSA: they get a $3,200 tax refund immediately, and when they withdraw the funds (plus growth) for a home purchase, they pay no tax. That is $3,200 effectively free money plus tax-free compounding.
If you open an FHSA and never buy a qualifying home, you can transfer the entire balance (contributions + growth) to your RRSP or RRIF at any time before the account's deadline, with no tax consequences at the time of transfer. It simply becomes RRSP savings. The FHSA is essentially a risk-free account — if you don't use it for a home, it rolls into your retirement savings.
KOHO's free banking helps you hit your TFSA contribution limit faster. Code 45ET55JSYA = $20 bonus.
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