FHSA vs RRSP

Last updated: October 10, 2023

What are the main differences between an FHSA and an RRSP?

The first home savings account (FHSA) and registered retirement savings plans (RRSP) are both registered plans that offer tax-deductible contributions, which can help lower your overall  tax bill in any given year. But the main difference is that an FHSA is used to buy a new home, whereas an RRSP is primarily used to save for retirement. However, if you have an RRSP, you can borrow from it to buy a new home with the Home Buyers’ Plan (HBP). 

Another key difference is that RRSP withdrawals under the HBP remain tax-free only if you make repayments according to the government’s schedule. FHSAs, by contrast, offer tax-free withdrawals specifically to purchase a new home, provided you meet certain conditions set out by the government. See FHSA withdrawal rules.

FHSA

RRSP

Eligibility

First-time homebuyers living in Canada. See rules.

Contribution limit?

$8,000 per year with a lifetime limit of $40,000.
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Tax deductible contributions

Yes.

Contribution deadline

December 31, 2023 is the deadline for contributing to an FHSA for the 2023 tax year.

Maximum withdrawal

You can withdraw as much as you like from your FHSA. 

Tax deductible contributions

Yes, up to your contribution limit.

Tax-free withdrawals

Only if you’re buying a qualifying home. See rules.

Eligibility

Anyone age 18 and up with a valid SIN.

Contribution limit?

18% of the income you earned last year, up to maximum limit ($30,780 for 2023).

Tax deductible contributions
Yes.

Contribution deadline

February 29, 2024 is the deadline for contributing to an RRSP for the 2023 tax year. 

Maximum withdrawal

You can withdraw as much as you like from your RRSP. However, if you’re withdrawing from an RRSP through the HBP, there are limits. See rules. 

Tax-free withdrawals?

No. You have to pay taxes on RRSP withdrawals – unless you’re making RRSP withdrawals through the HBP. See rules. 

Can I transfer an RRSP to an FHSA?

Yes, you can transfer funds from your RRSP to your FHSA, so long as you have available contribution room in your FHSA. However, it’s important to note that you can’t claim the amount transferred as a deduction on your tax return under the FHSA plan. Also, transfers from an RRSP to an FHSA don’t reinstate your RRSP contribution room. If you have available cash flow, consider contributing to the FHSA first, rather than transferring money from your RRSP. Connect with an advisor to discuss your unique situation. 

 

Is there a spousal FHSA like the spousal RRSP?

No, there’s no FHSA counterpart for a spousal RRSP. Only the FHSA holder can make and deduct contributions to their FHSA. 

 

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