FHSA Annual Deadline is Coming and Here’s What You Need to Know

Time is running out. If you're saving for your first home and haven't maximized your First Home Savings Account (FHSA) contributions for 2025, you have until December 31 to take advantage of this year's tax benefits.

Unlike RRSPs, there's no 60-day grace period. Therefore, my missing the deadline, you've lost a valuable opportunity to reduce your taxable income.

Any contributions you make on January 1st of the following year or later count towards the following year.

If you receive a year-end bonus or have extra cash from holiday gifts or savings, consider directing it toward your FHSA before the calendar flips.

Tax Filing Requirements

When tax season rolls around, you'll need to report your FHSA activity. If you opened an FHSA, made contributions, or took withdrawals during 2025, you must file Schedule 15 with your tax return. Your financial institution will provide a T4FHSA slip (typically by the end of February) showing your contributions and withdrawals for the year.

Understanding Your Contribution Limits

Your contribution room only starts accumulating after you open your FHSA. Unlike TFSAs, which grant contribution room based on your age, the FHSA clock doesn't start ticking until you actually open an account.

Opening your account in 2024 versus 2026 could mean the difference between having $16,000 or $8,000 of available contribution room when you're ready to start saving.

Remember that unused FHSA contribution room carries forward, but with an important limitation: you can only carry forward up to $8,000 from previous years. If you can't contribute the full $8,000 each year, try to contribute at least some amount to preserve as much of your lifetime $40,000 limit as possible.

Overcontribution Penalties

Accidentally contributing more than your available room triggers a penalty of 1% per month on the excess amount. This penalty continues every month until you either remove the excess contribution or gain enough new contribution room to absorb it.

So how do you fix this in case of an overcontribution? 

You need to make a "designated withdrawal" to remove the excess amount. This withdrawn amount doesn't get added back to your contribution room, so you've permanently lost that portion of your lifetime limit.

To avoid this costly mistake, check your contribution room before making deposits. You can find your available FHSA contribution room on your CRA Notice of Assessment or by logging into your CRA My Account.

Here's what you need to do before December 31

1. Check your current contribution room
2. Review your investments
3. Calculate how much you can contribute
4. Decide on your deduction strategy

Year-End Tax Planning

1. Estimate your current year's taxable income
2. Calculate your potential tax savings
3. Coordinate with RRSP and TFSA contributions
4. Consider professional advice

If your financial situation is complex, maybe you're self-employed, have rental income, or are navigating a major life change, a financial advisor can help you optimize your contribution strategy across all your accounts.

What makes FHSA so powerful is its unique combination of tax benefits that you won't find in any other Canadian registered account. We highly recommend you learn more about registered accounts.

Don't Let This Deadline Pass

This is an opportunity to reduce your tax bill, accelerate your home savings, and take advantage of one of Canada's most generous savings programs.