Multigenerational families—the ones composed of 3 or extra generations below one roof—are Canada’s fastest-growing form of family. From 2001 to 2021, they higher by means of 50%, in step with numbers from the 2021 census. Components contributing to this outstanding spike come with bloated housing prices, a decent actual property marketplace, emerging rates of interest and an getting old inhabitants. For Canadians with getting old folks or different kin who require care, organising a multigenerational house could make numerous sense, almost and financially. Alternatively, there are considerable prices related to making a secondary unit, and that’s the place the brand new Multigenerational House Renovation Tax Credit score (MHRTC) is available in.

What’s the Multigenerational House Renovation Tax Credit score (MHRTC)?

The MHRTC is a brand new refundable tax credit score, presented 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 declare 15% of the worth of your renovations costing as much as $50,000. In different phrases, when you spend $50,000 or extra, probably the most you’ll declare is $7,500 ($50,000 x 15% = $7,500). When you spend much less, the credit score is 15% of your qualifying expenditures.

Who’s eligible for the Multigenerational House Renovation Tax Credit score?

The MHRTC is to be had for an excessively explicit goal. To be eligible, you will have to be renovating your house as a way to create a secondary unit for a “qualifying relative”:

• A circle of relatives member who’s age 65 or older sooner than the tip of the renovation duration taxation yr
• A circle of relatives member who qualifies for the incapacity tax credit score and is no less than 18 sooner than the tip of the renovation duration taxation yr

A secondary unit will have to be self-contained and feature its personal front, kitchen, rest room and snoozing space. Word that there’s just one such renovation according to circle of relatives member allowed, which means that when you declare the MHRTC to construct a unit to your mum or dad, as an example, your sibling can not additionally construct a unit to your mum or dad and declare the credit score.

What renovation bills can I declare for the MHRTC?

The prices of maximum renovation items and services and products are allowed. Those would possibly come with allows, construction fabrics, tradespeople and kit leases. Word that such things as family home equipment, out of doors upkeep and safety tracking aren’t eligible. Additionally, when you do the paintings your self, you can’t declare the worth of your labour or your equipment.

How do I declare the MHRTC?

Be sure to stay all documentation of your expenditures, equivalent to invoices and receipts, and that they come with itemized lists of purchases; descriptions of labor carried out; distributors’ names, trade addresses and GST/HST numbers; and the dates of acquire and supply.

The MHRTC will have to be claimed in the similar tax yr that the renovations are finished, which means that when you start your renovations in 2023 and whole them in 2024, you’ll practice for the tax credit score within the 2024 tax yr.  

Whilst you whole your tax go back, you’ll declare the MHRTC on line 45355 of your T1 common tax shape. The Canada Income Company (CRA) has extra information about easy methods to declare the MHRTC.

MHRTC eligibility

Now not positive when you qualify? Step one: learn the principles at the Govt of Canada site. The CRA could also be responding to eligibility considerations raised for the reason that MHRTC used to be introduced in 2022.