Multigenerational Home Renovation Tax Credit 2025

Updated March 2025 · 10 min read

The Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal tax credit that helps Canadian families build a secondary suite in their home for a senior or adult with a disability. Introduced in 2023, it provides a 15% credit on up to $50,000 of eligible renovation costs — a maximum credit of $7,500.

Unlike many tax credits, the MHRTC is refundable, meaning even if your tax owing is zero, you can receive the credit as a cash refund from the CRA.

What Is the Purpose of the MHRTC?

The MHRTC was designed to help families create multigenerational living arrangements — specifically, to enable seniors (65+) or adults with disabilities to live with close relatives. It subsidizes the cost of building a self-contained secondary unit (like a basement apartment or garage suite) within or attached to the main home.

This supports aging in place, reduces strain on care facilities, and helps families stay close together while maintaining privacy and independence.

Who Can Claim the MHRTC?

The Qualifying Person

The secondary unit must be created for a "qualifying person" — someone who is either:

• A senior aged 65 or older at the end of the tax year the renovation is completed, or
• An adult with a disability who is eligible for the Disability Tax Credit (DTC)

The Qualifying Relation

The qualifying person must ordinarily reside in the secondary unit with a "qualifying relation" — a person related to the qualifying person who:

• Owns the home (or their spouse/common-law partner does)
• Is related to the qualifying person as: parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew

The qualifying relation (or their spouse/common-law partner) claims the credit on their tax return.

What Makes a Secondary Unit "Eligible"?

The secondary unit must be self-contained and have all of the following:

• A private entrance (can be shared from inside the main home, but must be separate from the main living area)
• A kitchen or kitchenette
• A bathroom (toilet, sink, and shower or bathtub)
• A sleeping area

The unit cannot be a room added to the main dwelling — it must function as an independent living space. A basement in-law suite with its own entrance, kitchen, bathroom, and bedroom is the classic example.

What Expenses Qualify?

Eligible expenses include reasonable costs for:

• Labour provided by a qualified contractor (GST/HST number on invoice required)
• Building materials and fixtures permanently attached to the dwelling
• Architectural, design, or engineering fees
• Building permit fees
• Equipment rentals directly related to the renovation

Expenses that do not qualify:

• Appliances (refrigerator, stove, dishwasher) — not permanently attached
• Furniture and moveable items
• Your own labour (DIY work is not eligible)
• Financing costs (interest, loan fees)
• Work done before 2023
• Costs already claimed under another tax credit (e.g., HATC) — no double-dipping

Calculating Your Credit

The calculation is straightforward:

1. Total eligible renovation expenses (up to $50,000 maximum)
2. Multiply by 15%
3. Result is your MHRTC credit (maximum $7,500)

Example: You spend $38,000 renovating your basement into a suite for your 70-year-old mother. Your credit = $38,000 × 15% = $5,700 refundable credit.

Example at maximum: You spend $65,000 on an addition. Only $50,000 of eligible expenses count. Credit = $50,000 × 15% = $7,500.

How to Claim the MHRTC

1. Complete Schedule 12 (Multigenerational Home Renovation Tax Credit) when filing your T1 return
2. Keep all receipts, invoices, contracts, and the building permit on file
3. Ensure invoices show the contractor's name, address, and GST/HST registration number
4. Have documentation confirming the qualifying person's age (65+) or DTC eligibility
5. Only one qualifying person per dwelling can be claimed in any given year

MHRTC vs Home Accessibility Tax Credit (HATC)

The MHRTC and HATC can both apply in some scenarios, but you cannot claim the same expense under both credits. If a renovation qualifies for both (e.g., adding an accessible bathroom in the new suite), you may split eligible expenses between the two credits to maximize your total tax savings.

• MHRTC: 15% on up to $50,000, max $7,500, refundable, requires creating a secondary unit
• HATC: 15% on up to $20,000, max $3,000, non-refundable, requires accessibility modification for a senior or DTC holder

Provincial Programs That Complement the MHRTC

Some provinces offer additional incentives for secondary suites:

• BC: Secondary Suite Incentive Program (forgivable loans up to $40,000 for eligible homeowners adding a secondary suite)
• Ontario: Various municipal programs for garden suites and basement apartments
• Alberta: Some municipalities offer reduced permit fees for secondary suites