FHSA Tax Deduction Calculator

This first-home savings account (FHSA) calculator helps you determine the tax deduction available on contributions made to your FHSA. If you need to calculate your total FHSA contribution limit – use this FHSA contribution room calculator. If you want to understand the total impact of your FHSA contributions within the FHSA to help you achieve homeownership – check out our FHSA growth calculator.

Understanding the FHSA Tax Deduction Inputs

There are four total inputs needed for the FHSA tax deduction calculation which are (1) annual contributions made; (2) annual income; (3) periods (years); and (4) province.

What contributions are you able to deduct?

When contributions are made into your first home savings account, they can be deducted from your income tax return, either in the year of contribution or carried forward to a future year. It is important to know the rules of the FHSA to make sure your contributions follow the guidelines of the FHSA and can be deducted.

When contributions have already been able to receive tax deduction benefits no further deductions can be claimed. This encompasses tax benefits from other plans – such as when contributions are made through transfers from an RRSP to an FSHA – since the contributions already received the tax benefit when they were made into the RRSP.

It is also important to note that contributions that break the FHSA rules are not eligible to be deducted for tax purposes. For example, you would not be able to include contributions that exceed your lifetime FHSA limit of $40,000. Another similar example includes contributions while not exceeding your lifetime limit – exceed your available contribution room. You can use our FHSA contribution room calculator to ensure you do not overcontribute.

The first home savings account allows you to deduct contributions from your tax return as well as grow your investments tax-free. This means that investment losses that are a result of investments held in the FHSA are not able to be deducted. You are also not able to deduct costs associated with the investments made in the FHSA such as administration fees, brokerage fees, and interest paid on money borrowed to invest in the FHSA.

What is the maximum amount you can deduct in a year?

The maximum amount that you can deduct in a year is the lesser of the following two formulas:

• (1) Maximum deductible amount for the year = (a) - (b); and
• (2) Maximum deductible amount for the year = $40,000 - (b) - (c)

• (a) The total of all your annual FHSA limits for the year and each prior year
• (b) The total of all your FHSA deductions for each prior year
• (c) All amounts transferred from your RRSP to your FHSAs for the year and each prior year

Let's take a look at some examples so we can better understand how this calculation works. We will try to answer the following question when looking at the examples – “what is the maximum amount you can deduct on your income tax and benefit return?”

Example 1: A FHSA account was opened when the program started on April 1, 2023. Total contributions of $24,000 were made over three years ($8,000 was contributed in 2023, 2024 and 2025). FHSA deductions of $8,000 were made on the 2023 income tax and benefit return from the contributions made in the first year of the plan. You are completing your 2025 tax return and want to know how much you can deduct.

Let’s start by breaking out all of the variables we will need for each formula:

• (a) $24,000
• (b) $8,000
• (c) $0

Let’s take a look at the first formula to see what the maximum deductible amount for the year would be. The first formula returns a maximum deductible amount of $16,000 ($24,000 - $8,000). We can now compare this to the second formula which returns $32,000 ($40,000 - $8,000 - $0). Taking the lower of the two formulas, we would be able to deduct a maximum of $16,000 (the result of the first formula) on the 2025 income tax and benefits return.

Example 2: A FHSA account was opened on January 1, 2024 – which was then funded through $8,000 annual transfers from an RRSP from 2024-2027 (four total years of $8,000 annual transfer for a total of $32,000). The first home savings account was then funded with contributions of $8,000 in 2028 at which point the FHSA reached its lifetime limit of $40,000. While you are completing the 2028 tax return you want to know how much you can deduct since no previous deductions have been made.

Once again we will start by breaking out all of the variables we need:

• (a) $40,000 ($32,000 + $8,000)
• (b) $0
• (c) $32,000 ($32,000)

We now need to compare the result of the two formulas to see which is the lesser of the two – which will be the maximum amount we can deduct. The first formula returns $40,000 ($40,000 - $0). We can compare this with the second formula which returns $8,000 ($40,000 - $0 - $32,000). Since the second formula is the lesser of the two we can use this as the value for our 2028 tax return – deducting a total of $8,000.

Legal Disclaimer

This calculation is for illustrative purposes only and should not be relied upon as specific financial advice. You should speak with a professional before making any final decisions to ensure that your financial needs have been properly taken into account.