FHSA Explained: Common Questions We are Being Asked Right Now

The First Home Savings Account (FHSA) continues to be one of the most discussed planning tools among our clients.

Below are the most common questions we are currently receiving at Mehra Wealth Management Group: along with answers to help you understand how this account may fit into your financial plan.

What exactly is the FHSA?

The FHSA (First Home Savings Account) is a registered savings account designed specifically to help Canadians save for their first home.

It offers a unique combination of benefits:

• Tax-deductible contributions (similar to an RRSP)
• Tax-free withdrawals when used for buying a qualifying first home (similar to a TFSA)
• Tax-free growth while funds remain invested

How much can I contribute?

Clients are often surprised by the structure:

• Up to $8,000 per year
• Lifetime limit of $40,000
• Unused room carries forward (up to the annual limit)

This makes it particularly useful for building a down payment over time.

Do I get a tax benefit now?

Yes. Contributions to an FHSA are tax-deductible, meaning they can reduce your taxable income in the year you contribute, similar to an RRSP.

Is it really tax-free when I withdraw?

Yes if used for a qualifying first home purchase, both contributions and investment growth can be withdrawn completely tax-free.

What if I don’t end up buying a home?

This is an important planning feature.

If you don’t purchase a home, your FHSA can be transferred tax-free into an RRSP or RRIF, preserving its tax advantages and keeping your savings plan intact.

Who is eligible?

To open an FHSA, you must:

• Be a Canadian resident
• Be 18 years or older
• Not have lived in a home you owned in the current year or previous four years

How is this different from my RRSP or TFSA?

We are often asked this directly:

• RRSP: Tax deduction now, taxed on withdrawal
• TFSA: No tax deduction, tax-free growth and withdrawal
• FHSA: Tax deduction now + tax-free withdrawal for first home purchase

Each account serves a different purpose in a broader financial strategy.

Can I invest the money inside it?

Yes. Like other registered accounts, your FHSA can hold cash, ETFs and Stocks (depending on account setup). This allows your down payment savings to remain invested and potentially grow over time.

Is this something I should be using?

In our conversations with clients, the FHSA is most effective for those who plan to purchase a first home within the next 5–10 years (perhaps for their children or grandchildren), want tax-efficient growth on savings, prefer flexibility if plans change. It may not be needed if you already own a home or do not intend to purchase one.

The FHSA is one of the most meaningful tax-efficient savings tools introduced in recent years, but like all planning strategies, its value depends on how it fits into your overall financial picture.

At Mehra Wealth Management Group, our team helps clients integrate FHSA, RRSP, and TFSA strategies into a coordinated plan designed around long-term goals, tax efficiency, and flexibility.

If you would like to review whether the FHSA fits into your personal plan, we are more than happy to walk through it with you.