Intergenerational Wealth Planning: Integrate the FHSA Into Your Plan

As the saying goes, “Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime.” Last year, 35 percent of homebuyers received down-payment gifts averaging $74,570, while first-time buyers in markets like Vancouver received around $208,000.¹ While meaningful to help buyers enter the market, other approaches may better build long-term financial habits.

From an intergenerational wealth planning perspective, a more structured way to provide support may be to direct funds toward a child’s First Home Savings Account (FHSA). Eligible Canadian residents aged 18* and older can contribute up to $8,000 per year, to a lifetime maximum of $40,000. Contributions are tax-deductible, similar to an RRSP, with qualifying withdrawals tax free, similar to a TFSA. The FHSA can generally remain open for 15 years (or the year following a qualifying withdrawal). If opened at age 18, it could remain open until around age 33, when many Canadians prepare to buy their first home.²

How does the FHSA help build the next generation’s financial skills?

Encourages investing behaviour and enables compounded growth — The FHSA provides meaningful tax- free growth potential. For example, if contributions are maximized from the outset, at an annual return of 5.5 percent, it could grow to $80,461 after 15 years (chart). This can then be withdrawn completely tax free for a qualifying first home purchase, in addition to the tax deductions received on contributions.

Supports structured saving toward a substantial down payment — A first-time home buyer who holds the FHSA can also access the Home Buyers’ Plan (HBP) through their RRSP. The HBP allows withdrawals of up to $60,000, subject to available funds and repayment rules. Together, these tools can help establish a structured approach to saving for homeownership. Using the previous example, this could result in over $140,000 available for a down payment.

Introduces tax-planning awareness over time — The tax deduction does not need to be claimed in the year contributions are made and can be carried forward to future years, even after the account is closed. This creates an opportunity to develop longer-term tax- planning discipline, helping align contributions and deductions with future income levels and resulting in greater tax savings.

Provides flexibility if plans change — While the FHSA is designed to support the purchase of a first home, if a qualifying purchase is not made within 15 years, the balance can be transferred to an RRSP/RRIF without affecting RRSP contribution room. Non-qualifying withdrawals are subject to withholding tax and are considered taxable income.

To learn more about how the FHSA can be integrated into your intergenerational wealth plan, please call.

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^{*Or age 19, depending on age of majority. 1. cmhc.ca/2025MCS; www.forbes.com/advisor/ca/mortgages/gifted-down-payment/; 2. In 2021, the average first-time home buyer age was 33; today, it’s around 40.}

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