Withdrawals from your FHSAs
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.
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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In all other cases, the amount withdrawn from your FHSA is a taxable withdrawal and must be included as income on your income tax and benefit return for the year the withdrawal is received.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
A "first-time home buyer" for the purpose of making a qualifying withdrawal is different than a "first-time home buyer" for the purpose of opening an FHSA.
For purposes of a qualifying withdrawal, you will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that you owned or jointly owned.
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).
You are responsible for making sure that all of the conditions to make a qualifying withdrawal are met. If you try to make a qualifying withdrawal from your FHSAs, and one or more of the conditions are not met at the time of the withdrawal, your withdrawal will be treated as a taxable withdrawal that you must include as income on your income tax and benefit return for the year received.
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Example
Bruno, a resident of Canada, opened his FHSA in April 2023 and made a yearly contribution of $8,000 to his account. He has never owned a house.
Bruno signed a written purchase agreement on May 15, 2025 to buy a qualifying home. The written purchase agreement stated that the possession date of the house would be January 8, 2026.
On July 4, 2025, Bruno filled out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA to make a qualifying withdrawal from his FHSA. He wanted to withdraw all the remaining property from his FHSA. He went to his financial institution and gave them the form to process the withdrawal. The withdrawal was completed on July 5, 2025.
Bruno continued to be a resident of Canada and acquired the house on January 8, 2026. Bruno started living in the house as his principal residence on February 1, 2026.
Since Bruno met all of the conditions to make a qualifying withdrawal from his FHSA, his withdrawal was not required to be included in income for his 2025 income tax and benefit return.
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.
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Example
Donna Mae opened her first and only FHSA in August 2023. She made yearly contributions of $5,000 to her FHSA and did not exceed her FHSA participation room for any year. She has been renting an apartment and has not occupied a property that she owned in the last six years.
On November 5, 2028, Donna Mae signed a written purchase agreement to buy a qualifying home. The purchase agreement stated that the closing date of the property will be March 15, 2029. She continued to live in a rental apartment since she opened her FHSA in 2023.
On January 11, 2029, Donna Mae went to her financial institution to make a withdrawal from her FHSA. She filled out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and asked to withdraw the full amount of her FHSA, which was $33,000, for the purpose of buying a qualifying home. Donna Mae did not make any other contributions or transfers to her FHSA after January 11, 2029.
The financial institution issued the qualifying withdrawal of $33,000 to Donna Mae on January 12, 2029. She acquired the house on March 15, 2029, and started living in it on the same day.
Donna Mae went back to her financial institution and closed her FHSA on December 16, 2030. Before she closed the account, its fair market value (FMV) was $0.
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.
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 taxable withdrawal. For more information, go to What happens if you contribute or transfer too much to your FHSAs.
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Example
Billy had $8,000 in his FHSA on July 3, 2023. On the same day, Billy withdrew $6,000 from his FHSA to buy a car. Since the amount withdrawn from Billy’s FHSA was not a qualifying withdrawal, a designated amount, or an amount otherwise included in his income, the amount that Billy withdrew is a taxable withdrawal.
Billy must report the withdrawal of $6,000 as income on his 2023 income tax and benefit return. Billy can claim the tax that his financial institution withheld from his taxable withdrawal 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.
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