Multigenerational Home Renovation Tax Credit: The Multigenerational Home Renovation Tax Credit (MHRTC) offers Canadian families up to $7,500 to create accessible, self-contained living spaces for senior or disabled family members. Covering 15% of renovation costs up to $50,000, this federal tax incentive encourages multigenerational living by assisting with the construction of secondary units. Renovations such as private entrances, kitchens, bathrooms, and sleeping areas are eligible. Here’s everything you need to know about MHRTC eligibility, benefits, and application steps.
What Is the Multigenerational Home Renovation Tax Credit?
Introduced in 2023, the MHRTC is a refundable tax credit aimed at helping Canadian families adapt their primary residences to include a secondary unit for senior relatives (65+) or adults with disabilities eligible for the disability tax credit. By offsetting up to $7,500 in renovation costs, the program supports the growing trend of multigenerational living, providing accessible housing close to family while easing financial strain.
Key Features of MHRTC
| Feature | Details |
|---|---|
| Maximum Credit | $7,500 (15% of up to $50,000 in renovation expenses) |
| Eligible Relatives | Family members aged 65+ or adults eligible for the disability tax credit |
| Qualifying Renovation | Construction of a self-contained secondary unit with private entrance, kitchen, bathroom, and bedroom |
| Claiming | File on Line 45355 of your T1 tax return (applicable starting 2023) |
Who Can Qualify for the MHRTC?
To be eligible for the MHRTC, applicants must meet the following criteria:
- Qualifying Individual: The secondary unit must be intended for either:
- Seniors aged 65 or older.
- Adults aged 18-64 who qualify for the disability tax credit.
- Qualifying Relation: The person renovating must be a close family member, such as a parent, grandparent, sibling, child, aunt, or uncle.
- Eligible Dwelling: The renovation must take place within the primary residence owned by the applicant or by a trust benefiting the qualifying individual. The relative must move into the unit within 12 months after the renovations are completed.
Eligible Renovations
To qualify for the MHRTC, the renovations must involve creating a self-contained secondary unit, which includes:
- Private Entrance: Independent access to the unit.
- Kitchen and Bathroom: Fully equipped facilities for independent living.
- Sleeping Area: A dedicated bedroom for the individual.
Eligible Costs: Materials, contractor fees, equipment rentals, and required permits.
Ineligible Costs: Household appliances, personal labor, routine maintenance, and security systems.
How to Calculate the MHRTC
The MHRTC allows you to claim 15% of eligible renovation costs, up to a maximum of $50,000.
- Maximum Credit: If renovation costs total $50,000, the credit is $7,500 (15% of $50,000).
- Partial Expenses: For expenses totaling $30,000, the credit would be $4,500 (15% of $30,000).
- Refundable Credit: You receive the credit amount even if your tax liability is lower than the credit.
How to Apply for the Multigenerational Home Renovation Tax Credit
Follow these steps to claim the MHRTC:
- Document Everything: Keep detailed records, including receipts, invoices, and contracts, showing the scope of renovations, costs, and proof of payment.
- Complete Schedule 12: Fill out CRA Schedule 12 when filing your T1 tax return. List all qualifying renovation expenses.
- File Your Tax Return: Submit your T1 return by the annual tax deadline, ensuring all forms and documents are included.
- Respond to CRA Queries: Keep all documents handy for verification if the CRA requests additional information.
Common Mistakes to Avoid
- Incomplete Documentation: Failing to keep receipts, contracts, or invoices can result in denial of your claim.
- Claiming Ineligible Costs: Exclude appliances, personal labor, or non-essential upgrades from your claim.
- Missing the Occupancy Deadline: Ensure the qualifying relative moves into the unit within 12 months of the renovation’s completion.
Benefits of MHRTC
The MHRTC provides Canadian families with significant financial relief while fostering closer family connections. By making accessible housing more affordable, this tax credit supports seniors and disabled individuals in living comfortably within a family environment.
FAQ
- Can multiple family members claim the MHRTC for one renovation?
No, only one family member can claim the credit for a single renovation. If multiple members share expenses, they must decide how to divide the claim. - What expenses are excluded from MHRTC eligibility?
Costs related to personal labor, household appliances, gardening, maintenance, and non-integral security systems do not qualify. - What is a qualifying secondary unit?
It is a self-contained living space within a primary home, meeting local building codes and featuring a private entrance, kitchen, bathroom, and bedroom. - Does the renovation need to be completed before claiming the credit?
Yes, the renovation must be finished in the same tax year as the claim. The qualifying individual must move in within 12 months post-renovation.