You may need or want to take property out of your first home savings account (FHSA) to buy your first house, or for another purpose. The reason you withdraw property from your FHSA changes how your withdrawal is treated for income tax purposes.

On this page

• Types of withdrawals
• Making qualifying withdrawals from your FHSAs
• Making taxable withdrawals from your FHSAs
• Making designated withdrawals from your FHSAs

Types of withdrawals

A withdrawal from an FHSA is not required to be included in your income if it is:

• a qualifying withdrawal
• a designated amount
• an amount otherwise included in your income

In all other cases, the amount withdrawn from your FHSA is a taxable withdrawal and must be included as income on your income tax and benefit return for the year the withdrawal is received.

If you transfer property directly from your FHSA to another FHSA, a registered retirement saving plan (RRSP) , or a registered retirement income fund (RRIF) , this is a transfer and not a withdrawal. For more information, go to Transfers between FHSAs and other registered plans.

Making qualifying withdrawals from your FHSAs

If you meet the qualifying withdrawal conditions, you can withdraw all of the property from your FHSAs tax-free. You can do this either in a single withdrawal or a series of withdrawals.

A qualifying withdrawal is a withdrawal from your FHSA where all of the following conditions are met:

• you must fill out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and give it to your FHSA issuer .
• you must be a first-time home buyer
• you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal
• you must not have acquired the qualifying home more than 30 days before making the withdrawal
• you must be a resident of Canada from the time that you make your first qualifying withdrawal from one of your FHSAs until the earlier of the acquisition of the qualifying home, or the date of your death
• you must occupy or intend to occupy the qualifying home as your principal place of residence within one year after buying or building it

There is no minimum number of days that contributions or transfers to your FHSAs must stay in your FHSAs before you can use them for a qualifying withdrawal. You can withdraw amounts from your RRSP under the Home Buyers’ Plan (HBP) and make a qualifying withdrawal from your FHSA for the same qualifying home, as long as you meet all of the conditions at the time of each withdrawal. For information about the HBP conditions, go to How to participate in the Home Buyers’ Plan (HBP).

Closing your FHSAs after making a qualifying withdrawal

You should close all of your FHSAs on or before December 31 of the year following the year of your first qualifying withdrawal. This is because your maximum participation period ends at the end of the year following the year of your first qualifying withdrawal. For more information, go to When to close an FHSA.

Making taxable withdrawals from your FHSAs

A withdrawal from an FHSA is not required to be included in your income if it is a qualifying withdrawal, a designated amount, or an amount otherwise included in your income.

In all other cases, an amount withdrawn from your FHSAs must be included as income on your income tax and benefit return for the year the withdrawal is received. This amount will be subject to income tax withholding, which can be claimed on your income tax and benefit return as a credit towards any tax owing for the year of the withdrawal.

Making designated withdrawals from your FHSAs

If you contribute or transfer to your FHSAs more than your FHSA participation room for the year, you will have an excess FHSA amount . Generally, you have to pay a tax equal to 1% of the highest excess FHSA amount in the month, for each month that the excess remains in the account.

When you have an excess FHSA amount, you will continue to pay the monthly 1% tax until the excess FHSA amount is eliminated.

If you have an excess FHSA amount, one of the ways that you can reduce or eliminate your excess FHSA amount is to make a designated withdrawal. The amount of the designated withdrawal is not required to be included as income on your income tax and benefit return in the year. For more information, go to What happens if you contribute or transfer too much to your FHSAs.