Buying your first home might not be happening tomorrow, or even next year, but that doesn't mean it's too early to start preparing.
If homeownership is one of your future goals, there's a savings tool worth knowing about: the First Home Savings Account (FHSA).
With the end of the year approaching, now is a good time to consider whether opening an FHSA before December 31 makes sense. Even if you're not in a position to contribute money just yet, opening an account could give you a head start on building your savings room for the future.
And if you're already a homeowner, this is something worth sharing with your adult children!
What Is an FHSA and Why Is It Worth Having?
The First Home Savings Account was designed to help eligible Canadians save toward their first home.
One of the biggest advantages is that it combines two valuable tax benefits:
Contributions are generally tax-deductible, similar to an RRSP.
Qualifying withdrawals used toward a first home are tax-free, similar to a TFSA.
You can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000.
But here's the part that many people don't realize: your FHSA contribution room doesn't start accumulating until you actually open your first account.
That means opening one before year-end could give you an advantage, even if you don't have money to contribute right away.
For example:
Open an FHSA in 2026 and make no contributions. You could have $16,000 in available contribution room in 2027.
Wait until January 2027 to open your first FHSA, and you would start with $8,000 in contribution room.
You can carry forward up to $8,000 of unused annual room, but it doesn't accumulate indefinitely. That's why the timing of opening your account can matter.
Parents: This Is Worth Passing Along to Your Kids!
If you have adult children who are working, saving or starting to think about buying their first home, an FHSA could be a great starting point.
Eligible individuals generally need to be Canadian residents, meet the first-time home buyer requirements and be at least 18 years old (or the age of majority in their province or territory, if higher).
Parents can also help by gifting money to their children to contribute to their FHSA, provided they have available contribution room. The child who owns the account can claim the applicable tax deduction.
One thing to keep in mind is that opening an FHSA starts the clock on its maximum 15-year participation period. So it's worth considering their potential home-buying timeline before opening an account too early.
A Few Year-End Reminders
If you already have an FHSA, there are a few things to remember as December 31 approaches.
FHSA contributions: Contributions must be made within the calendar year to qualify for that year's deduction. Unlike an RRSP, contributions made in the first 60 days of the following year cannot be applied to the previous tax year.
Save your tax deduction for later: You don't necessarily have to claim your FHSA deduction in the year you make the contribution. You can carry it forward to a future tax year when your income may be higher.
Check your contribution room: Before making a deposit, confirm how much room you have available. If you're planning a year-end contribution, give your financial institution enough time to process it.
Don't Forget About Your Other Savings Accounts
If you're planning your savings for the end of the year, there are a couple of other things worth remembering.
TFSA: If you withdraw money from your TFSA in December, that amount is generally added back to your contribution room on January 1 of the following year. Be careful not to put the money back too early if you don't have enough unused room.
RRSP: You have a little more flexibility here. Contributions made during the first 60 days of 2027 may still be claimed as a deduction for the 2026 tax year, subject to your available contribution room.
Start Planning Before You're Ready to Buy
Whether you're hoping to purchase your first home in the next year or simply starting to think about it, getting familiar with your savings and financing options early can make a big difference.
And if you're a parent, passing this information along to your children could be a simple way to help them take an important first step toward homeownership.
If buying a home is on your radar, I'd be happy to chat about what to expect, how much you may need for a down payment and what your mortgage options could look like.
The earlier you start planning, the more prepared you'll be when the right opportunity comes along!