Mortgage Blog

Why You Should Add Your 8,000 Dollars to Your First Home Savings Account Before December 31

December 1, 2025 | Posted by: Patricia McKean - Cochrane and Airdrie Mortgage Broker

If You Are Dreaming About Buying Your First Home

If you are dreaming about buying your first home one day, the First Home Savings Account is one of the best tools in Canada to help you get there. It lets you save money for your future down payment while also giving you a tax break. But there is one very important rule. You must put your yearly money into the account before December 31 to use it for the next tax season. That means adding up to 8,000 dollars for your 2025 taxes.

Here is why this matters.

What Is the First Home Savings Account

The FHSA is a special savings account created to help first time home buyers put money away for a down payment. It has two big benefits.

• You do not pay tax on the money you earn inside the account
• You get to write off what you put in, just like an RRSP (but you do not have to pay it back)

This means you get a tax break now and you grow your savings faster for later. You can put in up to 8,000 dollars each year and up to 40,000 dollars total.

Why December 31 Is So Important

To use your FHSA deposit on your 2025 taxes, the money must be in the account by December 31, 2025. If you miss the deadline, you lose the tax write off for that year. Putting in the full 8,000 dollars gives you the biggest benefit. Even adding a smaller amount still helps.

How the Tax Write Off Works

The amount you put in your FHSA lowers your taxable income.

Here is a simple example:

• You make 70,000 dollars a year
• You add 8,000 dollars to your FHSA
• The government taxes you as if you made 62,000 dollars

This can mean a tax refund worth hundreds or even thousands of dollars depending on your income. That refund can also be added back to your FHSA to grow your savings even more.

How This Helps Your Down Payment

The FHSA is designed to give you a strong start on your future home. Here is how it helps.

• Your money grows tax free
• You can take it out tax free for your first home
• You get tax refunds each year you contribute
• You can combine your FHSA with your RRSP Home Buyers Plan

This makes saving easier and faster. Many people use their FHSA as the main part of their down payment plan.

Planning Ahead

Here are a few helpful steps.

• Try to put in your yearly amount before December 31
• Set up monthly or biweekly automatic deposits
• Add your tax refund into your FHSA
• Keep track of your total limit so you do not go over

Even if you are not ready to buy a home yet, starting now gives you a big advantage later.

Final Thoughts

Saving 8,000 dollars a year in your FHSA can make a huge difference when you are ready to buy. It lowers your taxes, grows your money faster, and helps you build a strong down payment. If you want to talk about how this can fit into your home buying plan, feel free to reach out. I am always happy to help guide you through the steps.

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