💰 Tax Deductions for FHSA Contributions

Contributions you make to your First Home Savings Account (FHSA) may be deductible on your Canadian income tax and benefit return, similar to RRSP deductions, helping reduce taxable income. However, not all contributions qualify, and there are limits and special rules to keep in mind.

📅 Deductible Contributions

For any calendar year (January 1 to December 31), contributions eligible for deduction include amounts you personally contributed to your FHSA, up to your allowable FHSA limit for that year.

To calculate how much you can deduct, use Schedule 15 – FHSA Contributions, Transfers and Activities when you file your return. The maximum you can deduct is the lesser of:

  • Your total FHSA participation room from the year and prior years, minus any previous FHSA deductions; or
  • The lifetime FHSA limit of $40,000 minus previous FHSA deductions and minus any RRSP‑to‑FHSA transfers, plus any designated transfers from FHSA to RRSP/RRIF.

Example: If you contributed $5,000 in 2024 and this was your first FHSA year, you can claim up to that $5,000 as a deduction on your 2024 return.

📤 Unused Contribution Carry‑Forward

If you don’t claim your full FHSA contribution amount in a given year, unused contribution room can generally be carried forward and claimed in future years, even beyond the year you close your FHSA.

Your available unused FHSA deduction is shown on your latest notice of assessment or reassessment or on CRA Form T1028. If you lack these, you can call CRA to confirm the amount.

❌ Contributions That Cannot Be Deducted

Certain FHSA contributions are not deductible on your tax return for any year, including:

  • Contributions made in the first 60 days of a year cannot be claimed on the previous year’s return (unlike RRSPs).
  • Amounts contributed after your first qualifying withdrawal (used to buy a qualifying home). Such contributions are not deductible in any year.
  • Transfers from your RRSPs to your FHSA are not deductible.
  • Excess contributions over the lifetime limit of $40,000 are not deductible in any year.
  • Losses on FHSA investments, administrative fees, brokerage fees, and interest on borrowed money used to contribute are not deductible.

Example: If you withdraw funds as a qualifying withdrawal and then contribute again later in the same year, the latter contribution will not qualify for a deduction in any year.

📈 Impact of Excess FHSA Amounts

If total contributions and transfers to your FHSA exceed your participation room for a year, you have an excess FHSA amount. A 1% monthly tax applies on the highest excess amount for each month until eliminated. This also affects the maximum deduction you can claim — excess transfers can reduce your deductible amount.

🧠 Practical Tips

  • Report contributions on Schedule 15 every year you contribute or open an FHSA, even if you choose not to claim a deduction that year.
  • Consider deferring FHSA deductions to years when your income (and tax rate) is higher to maximize tax savings.
  • Keep records of all contributions, transfers and qualifying withdrawals to calculate allowable deductions accurately.