08/04/2023
Multigenerational Home Renovation Tax Credit (MHRTC) explained:
MHRTC is a refundable credit to assist with the cost of renovating an eligible dwelling to establish a secondary unit that enables a qualifying individual (a senior or an adult who is eligible for the disability tax credit) to live with a qualifying relation. The credit is available for qualifying expenditures made or incurred after December 31, 2022, for services performed or goods acquired after that date.
A qualifying renovation is one that creates a secondary unit in your home that will be occupied by your relative. The refundable credit is worth 15 % of the value of your qualifying expenditures, up to a maximum spend of $50,000. So if you spend $50,000 (or more) on the renovation, your credit is worth $7,500.
The relative can be a parent, grandparent, child or grandchild, brother, sister, aunt, uncle, niece or nephew of the homeowner or their spouse or common-law partner.
A “qualifying renovation” is a renovation, alteration or addition made to your home that’s of an enduring nature and integral to the home. The renovation must be undertaken to establish a secondary unit within your home in which your relative may live.
A secondary unit is a self-contained housing unit with a private entrance, kitchen, bathroom facilities and sleeping area. It can either be newly constructed or created from an existing living space that didn’t already meet the local requirements to be considered a secondary dwelling unit.
Expenses can only be claimed in the tax year in which the renovations are completed. So, if you start the renovations this year, but only finish them in 2024, the MHRTC can only be claimed in 2024.
Qualifying expenses:
Pretty much all renovation materials and services, along with the cost of permits and the rental of equipment used in the qualifying renovation will qualify.
Expenses that don’t qualify:
The cost of annual, recurring, or routine repair or maintenance, household appliances, home entertainment devices, security monitoring, gardening, outdoor maintenance and financing costs (i.e. interest on a home renovation loan or line of credit).
In addition, you can’t claim the MHRTC for any goods and services provided by your friend, neighbour or relative unless that person is GST/HST registered.
And, while you’re certainly allowed to do the work yourself, the only qualifying expenditures that are eligible for the credit would be expenses for building materials, fixtures, equipment rentals, building plans and permits — not the value of your labour (nor your tools.)
No double dipping:
Some renovation expenses, such as the purchase and installation of a wheelchair ramp if your relative can’t use the stairs, may qualify for the medical expense tax credit (METC) AND the home accessibility tax credit (HATC). If you claim either (or both) of these credits for those renovation expenses, they cannot be claimed again under the MHRTC.
The Income Tax Act does not require that a home be fully built prior to building a secondary unit in order for qualifying renovation expenses to be eligible for the MHRTC, nor does the Act require a taxpayer to reside in the home prior to adding a secondary unit.
The CRA did warn, however, that there must be a “reasonable expectation” that both the taxpayer and their relative will “ordinarily inhabit” both the home and the secondary unit within one year after the end of the renovations.
