Multigenerational households—these composed of three or extra generations beneath one roof—are Canada’s fastest-growing sort of family. From 2001 to 2021, they elevated by 50%, in response to numbers from the 2021 census. Components contributing to this outstanding spike embody bloated housing prices, a decent actual property market, rising rates of interest and an getting older inhabitants. For Canadians with getting older dad and mom or different relations who require care, establishing a multigenerational dwelling could make a variety of sense, virtually and financially. Nonetheless, there are substantial prices related to making a secondary unit, and that’s the place the brand new Multigenerational Dwelling Renovation Tax Credit score (MHRTC) is available in.
What’s the Multigenerational Dwelling Renovation Tax Credit score (MHRTC)?
The MHRTC is a brand new refundable tax credit score, launched within the 2022 funds, that’s designed to help with the price of renovating a house to create a secondary unit for a qualifying relative. The credit score took impact on Jan. 1, 2023.
With this credit score, you’ll be able to declare 15% of the worth of your renovations costing as much as $50,000. In different phrases, when you spend $50,000 or extra, essentially the most you’ll be able to declare is $7,500 ($50,000 x 15% = $7,500). If you happen to spend much less, the credit score is 15% of your qualifying expenditures.
Who’s eligible for the Multigenerational Dwelling Renovation Tax Credit score?
The MHRTC is on the market for a really particular objective. To be eligible, you have to be renovating your own home as a way to create a secondary unit for a “qualifying relative”:
- A member of the family who’s age 65 or older earlier than the tip of the renovation interval taxation yr
- A member of the family who qualifies for the incapacity tax credit score and is at the least 18 earlier than the tip of the renovation interval taxation yr
A secondary unit have to be self-contained and have its personal entrance, kitchen, lavatory and sleeping space. Word that there’s just one such renovation per member of the family allowed, that means that when you declare the MHRTC to construct a unit in your mother or father, for instance, your sibling can’t additionally construct a unit in your mother or father and declare the credit score.
What renovation bills can I declare for the MHRTC?
The prices of most renovation items and companies are allowed. These would possibly embody permits, constructing supplies, tradespeople and tools leases. Word that issues like family home equipment, out of doors upkeep and safety monitoring will not be eligible. Additionally, when you do the work your self, you can not declare the worth of your labour or your instruments.
How do I declare the MHRTC?
Be sure you preserve all documentation of your expenditures, equivalent to invoices and receipts, and that they embody itemized lists of purchases; descriptions of labor carried out; distributors’ names, enterprise addresses and GST/HST numbers; and the dates of buy and supply.
The MHRTC have to be claimed in the identical tax yr that the renovations are accomplished, that means that when you start your renovations in 2023 and full them in 2024, you’ll apply for the tax credit score within the 2024 tax yr.
Whenever you full your tax return, you’ll be able to declare the MHRTC on line 45355 of your T1 common tax kind. The Canada Income Company (CRA) has extra information about easy methods to declare the MHRTC.
MHRTC eligibility
Unsure when you qualify? Step one: learn the foundations on the Authorities of Canada web site. The CRA can also be responding to eligibility considerations raised because the MHRTC was introduced in 2022.