With housing affordability under pressure and caregiving needs on the rise, many Canadian families are choosing to live under one roof. Multigenerational living provides both emotional and financial benefits, but modifying your home to accommodate parents, grandparents, or disabled adults can be expensive.
To support these growing family dynamics, the Government of Canada offers the Multigenerational Home Renovation Tax Credit (MHRTC). Introduced in 2023, this refundable tax credit helps Canadians offset the cost of building a self-contained secondary unit within their home. In 2025, eligible families can claim 15 percent of up to $50,000 in renovation expenses, resulting in a maximum refund of $7,500.
This article provides a complete guide on how the MHRTC works, who qualifies, what expenses are eligible, how much you can claim, and how to file your return. If you’re planning a qualifying renovation in 2025, understanding this credit could save your household thousands of dollars.
What Is The Multigenerational Home Renovation Tax Credit (MHRTC)?
The Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal tax credit designed to support Canadians who renovate their homes to accommodate family members.
Specifically, the credit applies to renovations that create a self-contained secondary unit, enabling a senior or an adult eligible for the Disability Tax Credit (DTC) to live with a qualifying relative.
The credit provides 15 percent of eligible renovation expenses, up to $50,000 per qualifying renovation, giving you a maximum tax refund of $7,500. This can significantly reduce the cost of modifying your home to suit multigenerational living.
To be eligible:
- The secondary unit must have its own entrance, bathroom, kitchen, and sleeping area
- Renovations must be completed within the tax year you claim the credit
- You or the qualifying individual must live, or plan to live, in the dwelling within 12 months after completion
This credit reflects Canada’s commitment to supporting caregiving and family unity.
Who Can Claim The Multigenerational Home Renovation Tax Credit?
Knowing who qualifies to claim the MHRTC is key before planning or executing any renovations. The CRA has outlined specific guidelines that determine eligibility based on residency, relationships, and the nature of the renovation.
This section explains the categories of eligible individuals, the definition of qualifying relations, what happens in the case of death, and how cost sharing works within families.
Eligible Individuals
To qualify for the Multigenerational Home Renovation Tax Credit, an individual must meet specific criteria set by the Canada Revenue Agency.
Firstly, the person must be a resident of Canada for the entire tax year in which the renovation is completed. They must also own or ordinarily reside in the dwelling being renovated, or plan to reside in it within 12 months after the renovation ends.
In terms of relationship, the eligible individual must be one of the following:
- The qualifying individual themselves (a senior aged 65 or older, or an adult eligible for the Disability Tax Credit)
- The spouse or common-law partner of the qualifying individual
- A qualifying relation, such as a parent, grandchild, sibling, aunt, uncle, niece, or nephew of the qualifying individual
Only individuals meeting these criteria can claim the MHRTC on their tax return.
Qualifying Relations And Their Roles
A qualifying relation must be related by blood, marriage, or adoption. These include:
- Parents and grandparents
- Children and grandchildren
- Brothers, sisters, aunts, uncles, nieces, and nephews
The credit supports scenarios where these relatives contribute to or benefit from the renovation.
Special Conditions For Deceased Individuals
If a qualifying individual dies during or after the renovation period:
- They are still considered a Canadian resident for the tax year
- The claim can be made by a surviving spouse or a qualifying relative
- The eligibility remains valid if other conditions are met, such as occupancy and relationship
These rules ensure that families still receive support even in unfortunate circumstances.
Sharing Renovation Costs Among Family Members
Multiple eligible individuals can share renovation costs and split the MHRTC if:
- Each person contributes financially to the renovation
- All are eligible under CRA guidelines
- Their combined expenses do not exceed $50,000
Each individual can only claim the portion of costs they personally paid for. Proper record-keeping is essential when expenses are shared.
What Renovation Expenses Qualify For The MHRTC?
To benefit from the MHRTC, the expenses must be directly related to the creation of a self-contained secondary unit. The CRA defines this as a living space that is structurally separate and includes essential features such as its own kitchen, bathroom, and private entrance. This section outlines which costs are accepted, which are not, and the restrictions that apply to claims.
Criteria For Qualifying Expenditures
To qualify, expenses must:
- Be directly tied to the construction of the secondary unit
- Be paid by an eligible individual
- Be incurred between January 1, 2023, and the end of the tax year in which the renovation is completed
- Be supported by valid invoices or receipts
The renovation must serve the purpose of allowing a qualifying individual to reside with a relative while maintaining independence.
List Of Eligible Expenses
Acceptable expenses include:
- Building materials like insulation, drywall, or flooring
- Licensed contractor fees for plumbing, electrical, or structural work
- Architectural design services
- Rental of construction equipment
- Permit and inspection fees
All services must be performed by professionals who are registered for GST/HST.
Non-Qualifying Expenses You Should Avoid
Not every expense qualifies. Common disallowed costs are:
- Household appliances
- Furniture or decorations
- Home entertainment systems
- Landscaping or driveways
- Services from unlicensed or non-GST/HST registered family members
- Any expenses reimbursed by other tax credits or programs
Understanding these exclusions prevents disqualification during CRA audits.
Expense Limits And Restrictions
Regardless of how much you spend, you can only claim up to $50,000 per qualifying renovation. If multiple people contribute to the project, the total combined claim cannot exceed this amount. Each eligible person can only claim their own portion of the costs. You cannot claim another family member’s expenses, even if you live in the same home.
How Much Can You Claim Under The MHRTC In 2025?
Calculating your eligible refund from the MHRTC is straightforward once you understand the credit’s structure. The Canada Revenue Agency allows you to claim 15 percent of qualifying renovation expenses, up to a maximum of $50,000 per renovation. This section explains the refund calculation and includes a table of examples.
Maximum Claimable Amount
The highest amount you can claim is $7,500, which is 15 percent of $50,000. This is the cap per renovation, not per individual. If multiple people contribute, they must divide their claims accordingly.
If you complete more than one renovation for different qualifying individuals, you may be eligible to claim for each project, provided they are fully completed within the same tax year.
How The 15% Refundable Tax Credit Works?
The MHRTC is refundable, meaning you can receive money back even if you do not owe taxes. The refund is calculated based on your personal eligible expenses.
For instance:
- A $25,000 renovation = $3,750 credit
- A $40,000 renovation = $6,000 credit
- A $50,000 renovation = $7,500 credit
You cannot claim more than $7,500 per renovation, regardless of total costs.
MHRTC Claim Scenarios And Refund Amounts
| Total Renovation Cost | 15% Tax Credit | Refund Amount |
| $20,000 | 15% | $3,000 |
| $35,000 | 15% | $5,250 |
| $50,000 | 15% | $7,500 (Max) |
| $60,000 | 15% of 50,000 | $7,500 (Capped) |
This refund structure gives families confidence in planning renovations within a defined budget.
How Do You Claim The MHRTC On Your Tax Return?
Claiming the MHRTC on your income tax return is a straightforward process, provided you have the correct forms and supporting documents. Whether you file independently or with a tax professional, knowing the steps ensures a successful refund claim.
Step-By-Step Process Using Schedule 12
To claim the MHRTC:
- Complete Schedule 12 Multigenerational Home Renovation Tax Credit
- Enter all qualifying expenses and calculate the credit (15% of total)
- Include receipts and supporting documents for all listed expenses
Schedule 12 is essential and helps CRA verify your eligibility.
Where To Enter The Claim (Line 45355)?
After completing Schedule 12, report your total credit on Line 45355 of your tax return. This line is designated exclusively for MHRTC. Filing electronically through certified tax software will prompt you to enter this line automatically.
Required Supporting Documents
The CRA may request proof of your claim. Keep the following:
- Contractor invoices and receipts with GST/HST numbers
- Descriptions of services provided and materials used
- Building permits and inspections
- Proof of payment (cancelled cheques, credit card slips, etc.)
Maintain these records for at least six years.
When To Claim Based On Renovation Period
You must claim the MHRTC in the tax year the renovation is completed, not the year it begins. For example, if construction starts in 2024 but finishes in 2025, the claim is made on your 2025 return.
What Are Some Real-Life Examples Of MHRTC Claims?
Real-life examples can help you better understand how the MHRTC applies in different family scenarios. These case studies show both eligible and ineligible claims based on CRA rules.
Case Study 1: Sharing Renovation Costs Among Siblings
Yusuf, aged 78, moves into a new suite in Ali’s home. Fatima and Yusuf each pay $20,000 of the renovation cost. Both are eligible to claim their portions. Abdul, who also contributed $10,000 but does not own or live in the home, cannot make a claim.
Case Study 2: Adult With Disability Builds A Unit For Caregiver
Martin, who qualifies for the DTC, builds a basement suite for his caregiver. Since the caregiver is not a qualifying relative, the renovation does not qualify under MHRTC, even though Martin is eligible.
Case Study 3: Adding A Kitchen-Less Suite For Elderly Parent
Mo renovates a sunroom into a suite for his elderly mother but does not include a kitchen. Despite having a bathroom and private entrance, the unit is not self-contained and does not qualify.
Case Study 4: Building A Secondary Unit On The Same Property
Javi builds a detached home on his property for his aunt Lucie. Although she moves in months after completion, Javi qualifies since all structural and relationship criteria are met.
Case Study 5: Multiple Claims For The Same Relative (Ineligible)
Steve claims MHRTC in 2024 for renovating a unit for his grandmother. In 2025, Jeff completes another renovation for the same person but cannot claim MHRTC again, as only one claim is allowed per qualifying individual.
How Does The MHRTC Compare With Other Canadian Tax Credits?
Before claiming the MHRTC, it’s important to understand how it differs from similar tax credits and what can or cannot be claimed together. This comparison helps maximize your refund potential.
MHRTC Vs. Home Accessibility Tax Credit (HATC)
MHRTC supports the creation of a separate living space, while HATC covers costs related to accessibility improvements in an existing home. Both credits apply to seniors and those with disabilities, but for different types of renovations.
You cannot use the same receipts for both credits.
MHRTC Vs. Medical Expense Tax Credit
While the MHRTC focuses on housing accommodations, the Medical Expense Tax Credit supports health-related costs. If your renovation includes medical features like ramps or lifts, those may fall under the medical credit instead.
Always assess which credit provides the greater financial benefit.
Can You Combine MHRTC With Other Credits?
You can use other credits in the same year, but:
- You cannot claim the same expense under more than one credit
- Expenses must be divided appropriately and well-documented
- Combining credits strategically requires professional advice in complex cases
Making these distinctions ensures your claims remain valid with CRA standards.
Conclusion
If you’re thinking about renovating your home to accommodate an aging relative or a disabled family member, the MHRTC can offer valuable financial support. This federal refundable tax credit allows you to claim up to $7,500 for eligible renovation expenses, significantly easing the burden of multigenerational living costs.
The key to claiming the MHRTC successfully lies in knowing the rules, tracking your expenses accurately, and completing the required forms on time. Whether you’re building a basement suite or a detached unit on your property, ensuring it meets CRA standards will allow your claim to be processed smoothly.
As family care becomes increasingly home-based, this credit reflects a national recognition of shared responsibilities and long-term housing solutions. By taking advantage of the MHRTC in 2025, you’re investing in both your property and your family’s future.
FAQs
What is the purpose of the MHRTC?
The MHRTC provides a refundable tax credit to help Canadians offset the cost of building a secondary suite for a senior or adult with a disability to live with a relative.
Who counts as a qualifying individual?
A qualifying individual is someone aged 65 or older or someone 18 to 64 who is eligible for the Disability Tax Credit.
Can more than one family member claim the MHRTC?
Yes, as long as they all meet eligibility and share the renovation expenses, the credit can be split up to a total of $50,000 in qualifying costs.
What if the renovation spans two years?
Only the completion year matters. The claim must be made in the tax year the renovation ends.
Can the MHRTC be claimed twice for the same person?
No, the MHRTC can only be claimed once per qualifying individual in their lifetime.
Does the secondary unit need to be attached to the main home?
Not necessarily. The unit can be in a separate building on the same property, as long as all other eligibility criteria are met.
Can I claim expenses paid to a family member for work?
Only if that family member is registered for GST/HST under the Excise Tax Act. Otherwise, their services are not eligible.
