The multi-generational home renovation tax credit

The multi-generational home renovation tax credit became available on Jan. 1, 2023. It provides a one-time 15 per cent tax refund for renovation costs up to $50,000 for a secondary unit with a private entrance, kitchen, and bathroom.

A "qualifying individual" is an individual (other than a trust) who is:

  • 65 years of age or older before the end of the renovation period taxation year; or

  • 18 years of age or older before the end of the renovation period taxation year for whom an amount is deductible under the "disability tax credit" in computing tax payable for a renovation period taxation year, or would be so entitled if the restriction for attendant care were disregarded.

For the purposes of the MHRTC, an "eligible dwelling" is defined as a housing unit located in Canada that is:

  • owned (whether jointly or otherwise) by the qualifying individual or a qualifying relation of the qualifying individual (or a trust, if the qualifying individual or a qualifying relation is a beneficiary of the trust) at any time in the renovation period taxation year; and

  • where the qualifying individual and a qualifying relation of the qualifying individual ordinarily reside, or intend to ordinarily reside, within 12 months after the end of the renovation period.

The land on which the home is located can be part of the eligible dwelling. Usually, the amount of land that can be considered as part of the eligible dwelling is limited to half of a hectare (1.24 acres). However, if it can be shown that more land is needed to use and enjoy the home, more than this amount can be considered as part of the eligible dwelling. For example, this may happen if the minimum lot size imposed by a municipality at the time the property was acquired is larger than half of a hectare.

An "eligible individual" is:

  • an individual who ordinarily resides, or intends to ordinarily reside, in the eligible dwelling within 12 months after the end of the renovation period of a qualifying renovation and who is:

    • a qualifying individual,

    • the cohabitating spouse or common-law partner of a qualifying individual at any time in the renovation period taxation year, or

    • a qualifying relation of a qualifying individual; or

  • An individual who:

    • is a qualifying relation of a qualifying individual, and

    • owns the eligible dwelling or is the beneficiary of a trust that owns the eligible dwelling.

A "qualifying renovation" means a renovation or alteration of, or addition to, an eligible dwelling of a qualifying individual that:

  • is of an enduring nature and integral to the eligible dwelling; and

  • is undertaken to enable the qualifying individual to reside in the dwelling with a qualifying relation of the qualifying individual, by establishing a secondary unit within the dwelling for occupancy by the qualifying individual or the qualifying relation.

Only one qualifying renovation can be claimed in respect of a qualifying individual during their lifetime.

https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2022-plan-grow-economy-make-life-more-affordable/multigenerational-home-renovation-tax-credit.html

Jane Zhao