As the end of the year approaches, many British Columbians start thinking about where they should direct their savings. Should it go into a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), or First Home Savings Account (FHSA)? While contribution room doesn’t disappear if you skip a year, now is a good time to review your options before new contribution limits arrive in January.
For many British Columbians, that decision is about more than retirement savings. High housing costs continue to make homeownership a challenge, making it especially important to understand how each account can help you achieve your financial goals. Here’s a closer look at the three main registered accounts and how to prioritize them based on your stage of life.
TFSA, RRSP, and FHSA: A high-level overview
TFSA: The 2026 annual contribution limit is $7,000. If you’ve been eligible for the TFSA since it launched in 2009 and have never contributed, you have $109,000 in cumulative contribution room. Contributions aren’t tax-deductible, and growth and withdrawals are completely tax-free. Any amount you withdraw is added back to your contribution room the following calendar year. It’s the most flexible of the three accounts.
RRSP: The 2026 dollar limit is $33,810. However, your personal limit is calculated as 18% of your prior year’s earned income, up to that maximum, plus any unused room carried forward. Contributions are tax-deductible in the year you make them, which is most valuable when your income (and marginal tax rate) is higher. Withdrawals are fully taxable and ideally happen in retirement when your income and tax rate are lower.
FHSA: Designed specifically for first-time buyers, the FHSA combines some features from the other two accounts.
- You can contribute up to $8,000 per year, up to $40,000 lifetime maximum.
- Contributions are tax-deductible like an RRSP.
- Qualifying withdrawals toward a first home are completely tax-free like a TFSA.
You’re eligible if you haven’t owned a home that you lived in during the current calendar year or the four preceding years. Unused contribution room can also carry forward, up to $16,000 in a single year.
A FHSA can be used alongside the Home Buyers’ Plan (HBP) which allows a tax-free RRSP withdrawal of up to $60,000 per person ($120,000 for a couple) toward a first home. A household that maximizes both an FHSA and the HBP can bring together a meaningful down payment with real tax advantages.
What this means for future BC homeowners
This is where the FHSA can become particularly useful for Metro Vancouver buyers. As of June 2026, the composite benchmark home price across Metro Vancouver sat at roughly $1.1 million. Condo apartments, typically the entry point for first-time buyers, were benchmarked around $695,000 to $707,000. Home prices have eased modestly from their 2022 peak, and elevated inventory has pushed several segments of the market into buyer-favourable territory. However, affordability remains stretched relative to local incomes.
That gap is real: Analysis by WealthNorth using RBC’s Housing Affordability Index found that as of late 2025, aggregate home ownership costs required roughly 82% of median household income in Vancouver, well above the 32% typically considered sustainable for housing costs. Nationally, home prices rose about 53% between 2015 and 2025 while incomes rose only 13% over the same period, and that mismatch has been especially pronounced in Metro Vancouver.
While these numbers may seem daunting, they also highlight why understanding the FHSA matters. It’s the reason the FHSA exists, and it’s still underused. A couple who both open FHSAs and contribute the annual maximum can build $16,000 a year in tax-sheltered, tax-deductible savings specifically earmarked for a down payment, on top of whatever they’re already contributing to a TFSA or RRSP.
How you can maximize the benefits of each account based on your timeline
While the FHSA is great for those who are planning to buy their first home, the TFSA and RRSP are valuable options for savings in general. And unless you are saving towards your first home, there’s no single “right” order for contributing to a TFSA, RRSP, or FHSA. Ultimately, it depends on your income and timeline. Here’s how priorities tend to shift.
The young professional
You’re in your 20s or early 30s, likely still living at home or renting, and haven’t owned a home. Homeownership feels far off, but it’s a goal.
If you’re eligible for the FHSA, consider putting your savings here first. You get an upfront tax deduction now, while your income (and tax bracket) may still be relatively modest, and the eventual withdrawal toward a home is completely tax-free.
From there, a TFSA is a strong second option for anything you might need before a home purchase, like an emergency fund or short-term goals, since withdrawals carry no tax consequences and no impact on government benefits. For many early-career professionals saving for a first home, the practical priority order is often FHSA first, followed by a TFSA, with RRSP contributions becoming more attractive as income rises.
The new family
Perhaps you’re dual income, saving to purchase your first home, and juggling childcare costs alongside your own savings goals.
If one partner earns significantly more than the other, RRSP contributions from the higher earner (or a spousal RRSP) can meaningfully reduce your household’s overall tax bill, particularly in these higher-earning years. A TFSA remains useful for your emergency fund and shorter-term goals, like a renovation or a vehicle. If you haven’t owned a home in the current year or the past four, and you’re planning to upgrade into your first owned property together, an FHSA may still be on the table depending on your specific ownership history. And if you have kids, don’t overlook the registered education savings plan (RESP). The 20% Canada Education Savings Grant on the first $2,500 contributed annually provides an immediate government contribution toward a child’s education.
In many cases, families will find themselves balancing all three priorities at once: Reducing taxes through an RRSP, maintaining flexibility through a TFSA, and building a down payment through an FHSA. The right mix depends on which goal is most immediate.
The mid-career earner
You’re in your 40s or 50s, might already own a home, have some RRSP room built up, and are now more focused on reducing your tax bill and building retirement savings.
For many peak-earning professionals, the RRSP often becomes the top priority because the tax deduction produces the greatest benefit when income and tax rates are highest. Once you’ve contributed enough to meaningfully lower your tax bill (or maxed out your room), redirect additional savings to your TFSA, where decades of tax-free compounding can add up significantly by retirement. The FHSA is less likely to be a priority, unless you’re helping an adult child with a first home purchase.
Regardless of which account you prioritize, the details matter. Because contribution limits, tax implications, and eligibility rules interact differently for every household, developing a savings strategy is often less about choosing the “best” account and more about choosing the right account for your circumstances. A CPA can help assess those tradeoffs.
This article is not intended as financial advice, and you should not make financial decisions based solely on the information presented.
Nelson Soh, CPA, CA is a TEDx Speaker, best-selling author of Life Literacy and the 100 Day Money Mindset Journal and financial literacy champion. Nelson is also the co-founder of FSQ Consulting, a business consulting firm, and one of CPA Financial Literacy Program volunteers. You can follow Nelson on LinkedIn, Instagram, TikTok, or visit his website to learn more about his work.
