{"id":4157,"date":"2026-06-01T08:52:46","date_gmt":"2026-06-01T08:52:46","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/?p=4157"},"modified":"2026-03-31T21:15:39","modified_gmt":"2026-03-31T21:15:39","slug":"are-you-making-the-most-of-tax-free-tools","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/2026\/06\/01\/are-you-making-the-most-of-tax-free-tools\/","title":{"rendered":"ARE YOU MAKING THE MOST OF TAX – FREE TOOLS?"},"content":{"rendered":"\t\t
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The FHSA: Six Savvy Tips for Investors<\/h3>

Spring\u2019s arrival brings home-buying season, making it an opportune time to revisit a valuable tool that supports the purchase of a first home: the First Home Savings Account (FHSA). The account offers tax-deductible contributions, tax-free growth and tax-free withdrawals for qualifying home purchases. Generally, you must be a \u201cfirst-time homebuyer\u201d who is a Canadian resident over the age of majority, but not older than 71 on December 31 of the year in which the account is opened.<\/p>

Here are six tips to make the most of the FHSA:<\/p>

1. Even if you\u2019ve owned a home before, you may still qualify. <\/strong>If you or your spouse\/partner has owned a house in the past, you may still qualify if you haven\u2019t owned a home in the current year and in the preceding four calendar years. People also often assume that FHSAs are just for young buyers. However, \u201cseasoned\u201d investors who haven\u2019t owned a home in recent years might consider opening one, even if it isn\u2019t used for a home purchase, as it may act as a retirement savings boost (see point #6, below).
2. Maximize contributions early for compounded growth.<\/strong> The FHSA allows annual contributions of up to $8,000, with a lifetime limit of $40,000. However, the FHSA must be closed by December 31 of the earliest of: the 15th anniversary of opening, the year following the first qualifying withdrawal or the year the account holder turns 71. As such, not contributing the full $8,000 each year risks missing out on the lifetime limit, its tax deductible benefits and the potential for tax-free growth \"\"over time. Consider the scenario in which an investor contributes the maximum each year from the outset. At a 5.5 percent annual return, by year 5, the $40,000 contribution could grow to $47,104. By year 15, it could grow to over $80,000; all tax free upon withdrawal for the purchase of a first home.
3. Carry forward contributions for future tax savings.<\/strong> Like a Registered Retirement Savings Plan (RRSP), FHSA contributions are tax-deductible, and any unused deductions can be carried forward to a future year, even beyond the closure of your FHSA.1<\/sup> If you expect to be in a higher tax bracket in a future year, claiming the deduction later may help maximize your tax savings.
4. Be aware that the \u201ccarry-forward\u201d rules differ from other <\/strong>registered plans.<\/strong> This has been a source of some confusion. For the FHSA, an account holder can contribute $8,000 in annual participation room. Unused amounts can be carried forward to the following year, but only to a maximum of $8,000 and subject to a lifetime limit of $40,000. This differs from the Tax-Free Savings Account (TFSA) and RRSP, where unused contribution room is carried forward indefinitely (to age 71 for the RRSP); there is no limit. Take, for example, an individual who opened the FHSA in 2024 and contributed $4,000. In 2025, the FHSA would have $12,000 in participation room: $8,000 of new room for 2025 and $4,000 carried forward from 2024. If they do not contribute in 2025, they would have $16,000 of participation room in 2026, not $20,000, as only $8,000 carries forward from 2025. Excess contributions are subject to a penalty of one percent per month.
\"\"5. Combine the FHSA with the RRSP Home Buyers\u2019 Plan (HBP). <\/strong>You can use the FHSA alongside the RRSP\u2019s HBP. As of 2026, the HBP now allows you to withdraw up to $60,000 from your RRSP for a first-home purchase without tax consequences, subject to HBP repayment rules. Using the scenario above, if the FHSA grows to $80,000 and you use the full RRSP HBP, you could have $140,000 toward your first home.
6. Transfer unused FHSA funds to an RRSP or RRIF.<\/strong> If you do not use the FHSA to purchase a first home, assets can be transferred tax-free to an RRSP or Registered Retirement Income Fund (RRIF), essentially giving you additional contribution room for retirement savings.<\/p>

1. https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/<\/span>topics\/first-home-savings-account\/tax-deductions-fhsa-contributions.html<\/span><\/pre>
\"\"<\/a><\/p>
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Spring\u2019s arrival brings home-buying season, making it an opportune time to revisit a valuable tool that supports the
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