The Multigenerational Home Renovation Tax Credit (MHRTC) is a source of financial aid offered to Canadians renovating their homes to provide housing for relatives. First introduced in 2022, it helps extended families live together by creating affordable housing options.
Canada's housing crisis is real and many are struggling to find affordable places to live. Even if you can afford a down payment, buying a new home involves many other costs and is extremely expensive. Plus, prices for rental units have risen to extreme heights in recent years.
The MHRTC presents a unique opportunity for families to work together and create a unique solution to this problem. Below, you'll find a detailed study of this federal credit program and how it can help you and your loved ones.
Key Takeaways
- The Multigenerational Home Renovation Tax Credit (MHRTC) is a federal program that assists homeowners with the cost of renovations required to make space for a relative to live with them.
- The renovations must be for family members who are over 65 years old (or over 18 if they receive disability tax credits).
- Qualifying renovations include those that are completed after December 31, 2022, are integral to the dwelling, are long-lasting, and will allow your loved one to reside with you.
- The maximum amount you can claim is $50,000, which means the maximum credit you'll receive is $7,500.
Multigenerational home tax credit eligibility
In order to qualify for the Multigenerational Home Renovation Tax credit, you (the "qualifying relation") must be at least 18 years old and related to the person who you're undergoing the renovation for. In addition, your relation (the "qualifying individual") must be at least 65 years old, or 18 if they receive disability tax credits.
Only one MHRTC renovation can be claimed by a relative for any qualifying individual during their lifetime.
The term "relative" can include any of the following relationships:
- Parent
- Grandparent
- Child
- Grandchild
- Brother
- Sister
- Aunt
- Uncle
- Niece
- Nephew
Need to know: You can also claim the MHRTC if you are a person over 65 or an individual aged 18 - 64 with a disability, and you’re creating a secondary unit for a caregiver to live with you, as long as that caregiver is a relative.
Eligibility requirements for the home
Eligible dwellings include housing units within Canada that meet one or more of the following criteria:
- It must be owned by either yourself, the relative you're supporting, or both parties at some point during the tax year the renovations are taking place.
- It must be either where you or your relative live or intend to live within 12 months of the renovation's completion.
The land around the home can also be considered as part of the dwelling. This is usually limited to half a hectare (or 1.24 acres), but it's possible to include more land than this if you can prove the need for it.
Qualifying types of renovations
To qualify for the MHRTC, the renovation has to be either an alteration or addition that creates a secondary unit within the home where you and your eligible family member will live. Your home improvement project becomes a qualifying renovation when it meets the following criteria:
- It's integral to the dwelling itself.
- It has a private entrance and a separate kitchen, bathroom, and sleeping area.
- It's of good quality and will be long-lasting.
- It will allow you to live in the home along with your loved one.
Here are a few examples of the types of expenses related to these projects, repairs, and upgrades that are not included as part of the MHRTC:
- Recurring/routine maintenance
- Household appliance purchases
- Home entertainment device purchases
- Housekeeping, security, gardening, and/or outdoor maintenance costs
- Financing costs related to the renovation
- Anything not supported by receipts
- Anything already claimed under the Medical Expense Tax Credit and/or Home Accessibility Tax Credit
People with disabilities
While this credit program is designed to provide housing for seniors ages 65+, it also provides an opportunity to renovate and create dwelling space for a relative living with a disability, age 18 or more.
The renovations made must be related to improved accessibility and to accommodate the needs of your family member with disabilities. It's always a good idea to consult a tax professional to confirm that the work you'd like to do in your home is indeed eligible for the Multigenerational Home Renovation Tax Credit – and that claiming the credit is worth having part of your home potentially excluded from your principal residence exemption (PRE).
Also, keep in mind that you can't make multiple claims for the same renovations. You can't, for example, claim expenses under the Medical Expenses or Home Accessibility Tax Credit and also the MHRTC.
How do I claim the MHRTC?
MHRTC claims are made via your income tax return. You have to make the claim for the tax year during which your renovation ended, even if the renos took more than a year to complete. So if you begin your renovations in 2024 but don't finish until 2026, you can apply for this credit on your tax return for 2026.
Line 45355 of your T1 general tax form is where you input the information for this tax credit.
Be sure to keep and store all receipts and documents for expenses related to your renovation project so you'll have them at the ready when you're filling out your tax return. Here are a few examples of the information that you'll need to keep:
- Permits
- Contracts
- Vendor names
- Business addresses
- GST/HST numbers
- Dates of purchase and delivery
- Descriptions of work performed
- Dates of work performed
- Itemized lists of purchases
Of course, you'll also need to supply documentation that proves your eligibility for the program. This can include medical certificates and/or proof that you're related to the individual(s) benefitting from your renovation.
Maximum home renovation tax credit claim amounts
The maximum amount you can claim towards the Multigenerational Home Renovation Tax Credit is $50,000 – and the maximum credit you can receive is $7,500.
Again, remember that each person is only eligible to make one claim for one qualifying renovation during their lifetime.
How the MHRTC is calculated
To figure out how much of a credit you'll receive, you'll need to multiply the lowest personal income tax rate (15%) by either the total amount of your renovation spending or $50,000, whichever is less.
For example, let's say you spent $33,000 on your home renovation to prepare a secondary dwelling for an aging parent. Your calculation would look like this:
$33,000 x 0.15 = $4,950
However, the max is $50,000, so if you spent $65,000 on your renovation, you can only multiply the 15% by $50,000. So your calculation would look like this:
$50,000 x 0.15 = $7,500
Another important detail to note is that if you're not a resident of Canada during the tax year, you can't make a claim at all. You'll have to wait until after you file your taxes here the following year.
FAQ
What is the multigenerational home renovation tax credit?
The multigenerational home renovation tax credit provides funding for homeowners. The purpose is to help them make changes to their existing homes so that extended family members can live there. It's a unique way to fight the housing crisis.
How is the Saskatchewan Home Renovation Tax Credit related to this new credit?
The Saskatchewan Home Renovation Tax Credit allows homeowners to claim 0.5% of up to $20,000 of their home renovation expenses. This is a provincial credit, whereas the MHRTC is a federal tax credit program.
How do I know if my home renovation qualifies for the tax credit?
Qualifying renovations include those that are integral to the house, are of good quality, are long-lasting, and will allow you to live in the home with a relative who needs housing. You can check the government site for finer details.
Can I hire a family member to help with the multigenerational home renovation?
As long as the family member has a company that's registered for GST/HST, you can claim any goods or services provided by them. However, payments to skilled friends or family members without this qualification can't be claimed.
Will my home renovation still qualify for the tax credit if I do the work myself?
You can still claim some things if you do the work yourself. Eligible expenses include building materials (lumber, hardware, etc.), fixtures, equipment rentals, building plans, and permits. However, your own tools and labour don't count.
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