FHSA Withdrawal Rules 2026: Qualifying Withdrawals and Form RC725

A qualifying withdrawal is how money comes out of a First Home Savings Account tax-free: the whole amount, contributions and growth, with nothing to repay. It is qualifying only if six conditions are all met on the day of the withdrawal. This page sets out those conditions, the timing around closing, and the steps. The account as a whole is covered in the FHSA guide and the FHSA guides directory.

The six conditions

CRA’s conditions for a qualifying withdrawal, all of which must be met:

• You're a first-time buyer when you withdraw: you didn't live in a home you owned in the current year before the withdrawal (other than the 30 days just before it) or the previous 4 calendar years.
• You have a written agreement to buy or build a qualifying home in Canada, to be acquired or finished before October 1 of the year after the withdrawal.
• You didn't acquire the home more than 30 days before the withdrawal.
• You're a resident of Canada from the first qualifying withdrawal until you buy or build the home.
• You intend to live in the home as your principal residence within one year after buying or building it.
• You fill out Form RC725 and give it to your FHSA issuer.

Two points that often trip people up:

• The spouse isn’t part of the withdrawal test. The first-time buyer condition looks only at homes you owned or jointly owned, including one outside Canada that you lived in as your principal residence. A spouse’s or partner’s home matters when you open the account, not when you withdraw.
• There is no holding period. Money can be contributed, deducted and withdrawn in the same year; CRA sets no minimum number of days.

Which properties count as a qualifying home, and how the first-time buyer test applies in practice, are covered on qualifying home and first-time buyer rules.

Timing around closing

The acquisition deadline and the occupancy rule are separate conditions, and both have to be met. You have a written agreement to buy or build a qualifying home in Canada, to be acquired or finished before October 1 of the year after the withdrawal. You intend to live in the home as your principal residence within one year after buying or building it.

How to make a qualifying withdrawal

1. Sign the agreement to buy or build the home.
2. Complete Form RC725 and give it to your FHSA issuer.
3. Receive the funds with no tax withheld.
4. Close on the home and move in within the year.
5. At tax time, the withdrawal appears on your T4FHSA slip but is not added to your income. Reporting is summarised in the FHSA guide.

The FHSA withdrawal form

The form for a tax-free withdrawal is Form RC725, Request to Make a Qualifying Withdrawal from your FHSA. You fill it out and give it to your FHSA issuer, which processes the withdrawal. Filling out the form is itself one of the conditions of a qualifying withdrawal, and if any condition isn’t met, the amount withdrawn may be a taxable withdrawal instead; when a withdrawal isn’t qualifying explains what that means. The CRA publishes the form as a fillable PDF on its RC725 page, to be downloaded and opened in Acrobat Reader 10 or later rather than in a web browser.

Partial and multiple withdrawals

You don’t have to take everything at once. You can make more than one qualifying withdrawal for the same home, as long as each one meets the conditions when it is made. There is no cap on the amount withdrawn: the $40,000 limit applies to contributions, and every dollar of growth can come out tax-free as well.

The clock matters, though. Your first qualifying withdrawal brings the end of the account forward. Your FHSA's maximum participation period starts when you open your first FHSA and ends on December 31 of the year in which the earliest of these happens: the 15th anniversary of opening your first FHSA, you turn 71, or the year after your first qualifying withdrawal. Until then the balance can be transferred directly to your RRSP or RRIF without tax or withdrawn as taxable income; anything still in the account afterwards loses its FHSA status and its fair market value is included in your income for that year. The closing rules are on what happens to your FHSA if you never buy.

When a withdrawal isn’t qualifying

If any condition isn’t met, the withdrawal is taxable: it is added to your income for the year and tax is withheld at source. The part that did not fix an over-contribution returns as re-participation room the following year. The tax, the withholding rates and the room are covered on withdrawing from an FHSA not for a home.

If you decide not to buy at all, a direct transfer to an RRSP or RRIF avoids that tax; see what happens to your FHSA if you never buy.

Using the FHSA with the Home Buyers’ Plan

CRA allows a qualifying FHSA withdrawal and an RRSP withdrawal under the Home Buyers’ Plan for the same home, as long as each meets its own conditions when made. The HBP portion (up to $60,000) has to be repaid; the FHSA portion does not. The two are compared on FHSA vs the HBP, and using both.

Common questions

Can the money go toward closing costs as well as the down payment? CRA’s conditions govern when you can withdraw (the agreement, your status, the timing and the form), not how the funds are spent once the withdrawal qualifies.

Can I buy with someone who isn’t a first-time buyer? Yes. Your withdrawal depends on your own status. A co-buyer who isn’t a first-time buyer can’t make their own qualifying withdrawal, but that doesn’t affect yours. How couples combine two accounts is on the FHSA for couples.

Can I use my FHSA to buy a rental property or a cottage? Only if you intend to live in it as your principal residence within a year of buying it. A property bought purely as an investment doesn’t meet condition 5.

What if I become a non-resident before the purchase closes? Condition 4 requires residency from the first qualifying withdrawal until you acquire the home. The rules for non-residents are on the FHSA for newcomers.

Related guides

• FHSA calculator
• FHSA vs TFSA vs RRSP
• First-time home buyer programs
• Mortgage calculator