FHSA Contribution Room Calculator

What is your First Home Savings Account (FHSA) contribution room?

Finding out your FHSA contribution room will represent the maximum amount you can contribute in the current calendar year. It is important to understand your maximum contribution room to avoid incurring penalties that can happen when overcontributions are made. FHSA contribution room starts to accumulate in the calendar year you opened the account. The current annual contribution limit is $8,000 – with a total lifetime maximum FHSA contribution room limit of $40,000.

FHSA contribution limits by year

The FHSA was introduced by the federal government in 2022 – with an April 1, 2023 start date for contributions to be made. While the annual FHSA contribution limit is $8,000 and the lifetime FHSA limit of $40,000 these limits may change depending on factors including policy decisions, economic conditions, and inflation.

• 2023 - $8,000
• 2024 - $8,000

How to calculate your FHSA contribution room?

FHSA contribution room can be calculated by adding the annual contribution limit in the current calendar year to any unused FHSA participation room from previous years – this contribution room is then limited by your total contributions to ensure FHSA does not exceed the $40,000 maximum limit.

The Maximum FSHA contribution room is the lesser of the two formulas:

• (1) Maximum FHSA contribution room = (a) + (b); and
• (2) Maximum FHSA contribution room = $40,000 - (c)

• (a) FHSA participation room for the current calendar year
• (b) Unused FHSA participation room (maximum of $8,000 carryforward)
• (c) Total FHSA contributions and transfers

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 contribution you can make in the current year?”

Example 1: A FHSA account was opened in the 2023 calendar year. Over the next two years, contributions of $3,000 were made in 2023 – followed by contributions of $7,000 in the 2024 calendar year. You are planning on making the maximum contribution in 2025 and want to know the maximum allowed.

Let’s start by finding the variables needed for each formula:

• (a) $8,000
• (b) $6,000 ($5,000 carried forward from 2023 + 1,000 carried forward from 2024)
• (c) $10,000 ($3,000 + $7,000)

Let’s see what the lesser of the two formulas is to find the maximum contribution. The first formula returns $14,000 ($8,000 + $6,000). We can now compare this to the second formula which makes sure we do not contribute over the $40,000 lifetime maximum. The second formula returns $30,000 ($40,000 - $10,000). Therefore, the lesser of the two formulas is the first formula which means we can contribute a maximum of $14,000 in 2025.

What happens if over-contributions are made to the FHSA?

If you make contributions or transfer more to your FHSA than your contribution room allows in the calendar year – you will incur a penalty to tax the excess FHSA amounts. In most cases, you will be required to pay a tax of 1% on the highest excess FHSA amount monthly. You will continue to incur this monthly tax if the over-contributions remain in your FHSA. This over-contribution can be eliminated through the removal of contributions and transfers from your account – or when additional contribution room is introduced at the start of the following calendar year.

Can contributions be made from other accounts (TFSA + RRSP)?

Yes – contributions to your FHSA can be made through transferring funds from your tax-free savings account (TFSA) or registered retirement savings plan (RRSP). Funds transferred from your TFSA will be able to benefit from the tax deduction available on contributions made into the FHSA – however, transfers from your RRSP will not be able to receive tax deductions as they already received this benefit when the contributions were made to the RRSP. Transferred funds from an RRSP will still be able to benefit from the tax-free withdrawal when using the funds for an eligible home purchase.

How to withdraw funds from your FHSA without tax implications?

If funds from your FHSA are withdrawn and are not considered to be for a designated or qualifying withdrawal – they will need to be included on your tax return as income. A designated withdrawal would be a withdrawal that eliminates an excess contribution amount in your FHSA. Where a qualifying withdrawal is made for the FHSA's intended purpose which is to buy a home – while still meeting all of the conditions for a qualifying withdrawal.

While not considered a withdrawal, you are also able to transfer amounts out of your FHSA without immediate tax consequences. Since the FHSA has a maximum participation which is the earliest of (1) the 15th anniversary of opening your FHSA; (2) when you turn 71 years of age; or (3) the year following your first qualifying withdrawal – you may need to transfer funds to close your FHSA. In the case of an account closing down, funds can be directly transferred to your RRSP or RRIF to avoid including the amount as taxable income.

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.