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Multigenerational Home Renovation Tax Credit (MHRTC)

In April 2022, the federal government passed a budget that contained a new refundable tax credit called Multigenerational Home Renovation Tax Credit (MHRTC). As real estate prices continue to rise in many Canadian cities, the MHRTC provides some financial assistance to home owners who choose to live and support qualified individuals. Effective in the 2023 taxation year, the MHRTC will be available to individual taxpayers. Details of the MHRTC can be found in the CRA link herein.

Home owners can claim this credit up to $50,000 in qualifying expenses for each qualifying renovation completed to create a self-contained secondary unit. The secondary unit must allow a senior (65 or above) or an adult under 65 who is eligible for the disability tax credit ordinarily resides, or intends to ordinarily reside, in the eligible dwelling within 12 months after the renovation is completed. The MHRTC is 15% of qualifying expenses, up to a maximum credit of $7,500, for each claim.

Some Notes to the MHRTC

  1. All eligible renovations must meet local city permit requirements and approval. No unauthorized renovations without a permit may qualify for the MHRTC.
  2. Home owners who do the renovations themselves may not bill their own time, claim the value of their labour or depreciation of their tools in computing the expenses of the MHRTC.
  3. To prevent double dipping, one cannot claim the same expense for more than one credit. This means that no eligible renovation expenses in a MHRTC claim can be claimed again for the medical expense tax credit or the home accessibility tax credit. Eligible expenses in an MHRTC claim must be reduced by any amounts that can reasonably be considered to have been reimbursed by other programs.
  4. A secondary unit must be self-contained and have its own entrance, kitchen, bathroom and sleeping area.
  5. There is no requirement for the qualifying family member to be living with the MHRTC applicant prior to the renovation.
  6. Current legislation only allows one such renovation per family member. If the MHRTC to build a unit for a parent, other sibling(s) cannot claim the credit to build another unit for the same parent. However, the MHRTC may be split among taxpayers in the same family that share the renovation costs as long as certain conditions are met, subject to the aforesaid credit maximum.
  7. MHRTC must be claimed in the tax year when the qualifying renovation is completed (for example, when the qualifying renovation passes the final inspection or proof of project completion is received).
  8. Use Schedule 12, Multigenerational Home Renovation Tax Credit, to report expenses related to the MHRTC and calculate the total credit one can claim. For 2023 and later tax years, the MHRTC is claimed on line 45355 of T1 income tax and benefit return. Claiming more than one qualifying renovation in the same year is allowed.
  9. Since MHRTC is a new refundable tax credit, it is likely that supporting documents (such as confirmation of eligibility, permits, receipts from vendors and contractors, proofs of payment) will be reviewed by the tax authority after a tax return claiming MHRTC is processed.
Multigenerational home tax credit in the news

Our Remark

According to data from the 2021 census, multigenerational households increased by 50% from 2001 to 2021. High real estate prices, rising interest rates and an aging population have changed the lifestyle of many Canadian households. Middle age people living with their parents who are home owners is becoming more and more common. This change brings forth the social benefit that more seniors in the aging population are being taken care by their children and hence reduce the demand of senior care facilities.

However, many, if not most, home owners are aging parents who would like to help their adult children to meet their housing needs. Like Morie Ford in the CBC news footage on the right, the current MHRTC offers no assistance to home owners who want to assist their children to solve their housing problem at all unless their children are disable. Many home owners and their children could benefit if the eligibility of the MHRTC expands not only to parents renovating their homes suitable for multigenerational living with their able children but also includes acquisition costs of existing homes suitable for multigenerational living.

In view of the high constructions costs and real estate prices, the 15% MHRTC is insufficient to make unaffordable housing affordable in many cases. Furthermore, purchases of existing homes suitable for multigenerational living do not qualify for the MHRTC. Under these limitations, many Canadian home owners find the benefits of the MHRTC marginal in assisting them to acquire homes suitable for multigenerational living.

           

[This page was added on 14 January 2024 and last revised on 14 January 2024.]