In today's fast-paced world, the idea of multiple generations living under one roof is making a strong comeback. Families are discovering the many perks of having grandparents, parents, and children all sharing a home. It fosters closer bonds, provides built-in childcare and eldercare, and helps manage rising living costs. To support this trend, the Canadian government introduced the Multigenerational Home Renovation Tax Credit (MHRTC), a fantastic way to make home renovations more affordable for families looking to live together harmoniously.

What is the Multigenerational Home Renovation Tax Credit?

The Multigenerational Home Renovation Tax Credit is a non-refundable tax credit aimed at helping families cover the cost of eligible home renovations. These renovations must be intended to create a secondary dwelling unit that will be occupied by a senior (65 years or older) or an adult with a disability. The MHRTC is available for qualifying renovations made on properties that are owned by the family member seeking the tax credit. Essentially, it’s a financial boost for families making their homes more inclusive and accommodating for all generations.

Who Can Claim the Multigenerational Home Renovation Tax Credit?

To be eligible for the MHRTC, the following conditions must be met:

1) Eligible Individuals: The renovation should benefit a senior (65 years or older) or an adult with a disability. The tax credit can be claimed by:
  • The homeowner
  • The eligible person (senior or adult with a disability) living in the home
  • A family member of the eligible person (e.g., parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew)

2) Eligible Properties: The home being renovated must be owned by the individual claiming the credit. It should be the primary residence of the eligible person after the renovations are done.

Maximum Amount of Expenses you Can Claim

The MHRTC allows you to claim 15% of your eligible renovation expenses, up to a certain limit. Here’s how it works:
  • Maximum Eligible Expenses: You can claim up to $50,000 worth of eligible expenses.
  • Maximum Tax Credit: The maximum tax credit you can receive is 15% of $50,000, which equals $7,500.

Eligible Renovation Expenses

The renovations should aim to create a secondary living unit within the home for the eligible person. Examples of qualifying renovations include:

Building an Addition or Secondary Suite:
  • New Additions: Adding a new part to your home, like a granny flat or in-law suite, to create a separate living area.
  • Converting Existing Spaces: Transforming a basement or attic into a livable, self-contained suite.

Renovating Existing Spaces:
  • Creating a Separate Living Area: Making a room into a self-contained space with its own bathroom and kitchen.
  • Adding Partitions: Installing walls or dividers to carve out a private living space.

Accessibility Features:
  • Mobility Enhancements: Adding ramps, handrails, or grab bars to help with mobility.
  • Stair Lifts and Elevators: Installing devices to ensure all parts of the home are accessible.
  • Wider Doorways and Hallways: Modifying these areas to accommodate wheelchairs or walkers.

Bathroom Modifications:
  • Safety Upgrades: Installing walk-in bathtubs, roll-in showers, grab bars, and non-slip flooring to enhance safety.
  • Accessible Fixtures: Adjusting the height of sinks and toilets to make them more user-friendly.

Kitchen Modifications:
  • Lowered Countertops and Cabinets: Making kitchen areas more accessible by lowering work surfaces.
  • Pull-Out Shelves and Adjustable Surfaces: Adding features that make kitchen storage and workspace more convenient.
  • Touchless Faucets and Easy-to-Use Appliances: Installing appliances and fixtures that are simpler to operate.

Electrical and Plumbing Work:
  • Upgrades for Accessibility: Enhancing electrical systems to support new accessibility features.
  • Plumbing Adjustments: Installing or modifying plumbing for new bathrooms or kitchen areas.

Other Essential Improvements:
  • Improved Lighting: Enhancing lighting to ensure safety and visibility.
  • HVAC Enhancements: Upgrading heating, ventilation, and air conditioning systems for a comfortable living environment.
  • Soundproofing: Adding soundproofing to create a quiet and private space.

Non-Eligible Expenses

Some expenses don't qualify for the MHRTC. These typically include:
  • General Maintenance and Repairs: Costs like painting, fixing a leaky roof, or other general upkeep.
  • Outdoor Improvements: Landscaping or other outdoor projects not directly related to the secondary dwelling unit.
  • Furniture and Appliances: Items that are not permanently installed.
  • Security Systems: Home security systems and alarm installations.

How to Claim the Multigenerational Home Renovation Tax Credit?

Claiming the MHRTC involves several steps. Here’s a step-by-step guide to help you through the process:

1) Plan Your Renovation:
  • Ensure your renovation project meets all eligibility criteria.
  • Keep thorough records of the renovation, including contracts, receipts, and invoices. These documents will be important for your claim.

2) Calculate Your Eligible Expenses:
  • You can claim 15% of your eligible renovation expenses, up to a maximum of $50,000. This means you can get up to $7,500 back in tax credits.
  • Make sure to add up all your eligible expenses carefully.

3) Fill Out the Necessary Tax Forms:
  • When filing your personal income tax return, complete the sections related to the Multigenerational Home Renovation Tax Credit (MHRTC is claimed on line 45355).
  • Use Schedule 12 to report your expenses related to the MHRTC and calculate the total credit you can claim.

4) Submit Supporting Documentation:
  • Be ready to provide documentation if the CRA requests it. This includes receipts, invoices, and contracts.
  • Keep detailed records of all communications and agreements with contractors.

5) File Your Tax Return:
  • Include the completed MHRTC form with your personal income tax return.
  • Ensure you file on time to avoid any penalties or delays in processing.

When to Claim MHRTC?

You need to claim the MHRTC on your personal income tax return for the year in which you completed the renovations. Here’s the timeline you should follow:
  • Finish Your Renovations: Ensure that all renovation work is completed within the tax year you want to claim the credit. For example, if you finish your renovations in 2024, you will claim the credit when you file your taxes for 2024.
  • Filing Deadline: Make sure to file your income tax return by the deadline, which is typically April 30 of the following year. So, for renovations completed in 2024, your tax return should be filed by April 30, 2025.

Benefits of the MHRTC

The MHRTC offers several benefits for families considering multigenerational living:
  • Financial Relief: Renovating a home can be expensive. The MHRTC helps make these renovations more affordable by providing a significant tax break.
  • Improved Accessibility: By supporting renovations that enhance accessibility, the MHRTC helps seniors and adults with disabilities live more comfortably and independently.
  • Stronger Family Connections: Multigenerational living brings families closer together, allowing for shared responsibilities like caregiving and household chores.
  • Increased Property Value: Renovations that create additional living space and improve accessibility can boost the value of your home, offering long-term financial benefits.

The Multigenerational Home Renovation Tax Credit is a thoughtful initiative that addresses the evolving needs of Canadian families. By offering financial support for renovations that promote multigenerational living, the MHRTC helps families create homes that are inclusive, accessible, and supportive. Whether you're making room for aging parents, providing a safe space for a family member with a disability, or simply looking to enhance your home’s functionality, the MHRTC can make your renovation project more achievable and rewarding.

For more detailed information and to see if your renovation plans qualify for the MHRTC, visit the official Government of Canada website. Embrace the benefits of multigenerational living and take advantage of the MHRTC to transform your home into a welcoming space for all generations.