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Federal Multigenerational Home Renovation Tax Credit (MHRTC) Line 45355 2023 and Later - Refundable
Income Tax Act s. 122.92
What is the Multigenerational Home Renovation Tax Credit?
Amount of the Multigenerational Home Renovation Tax Credit
Medical Expense Tax Credit and the HATC
What About My Principal Residence Exemption?
Superior Court of Ontario Case - Sidhu v. Sidhu ONSC 4618 - document your intentions!
Canada Revenue Agency (CRA) Resources
What is the Multigenerational Home Renovation Tax Credit?
The Multigenerational Home Renovation Tax Credit is a refundable tax credit introduced in the Federal 2022 Budget. The credit is for qualifying expenses incurred in 2023 or later, for renovations or alterations to create a secondary unit in a dwelling, to permit a qualifying individual to live with a qualifying relation.
Amount of the Multigenerational Home Renovation Tax Credit
The MHRTC applies to the total qualifying expenditures of an eligible individual, up to a maximum of $50,000 for a qualifying renovation that ended in the taxation year. If there is more than one qualifying individual, the maximum of $50,000 can be split between the individuals. If the individuals cannot agree as to the portion to be deducted by each of them, the Minister may set the portions.
The credit is at the lowest personal tax rate of 15%, so the maximum tax reduction per year is $7,500 ($50,000 x 15%).
Only one qualifying renovation can be claimed in the lifetime of an individual.
The MHRTC is claimed on federal Schedule 12.
Medical Expense Tax Credit (METC) and the MHRTC
If a qualifying expense also qualifies for the medical expense tax credit, they are not eligible for the MHRTC if they have been claimed under the medical expense tax credit and/or the Home Accessibility Tax Credit (HATC).
Qualifying Individual
A qualifying individual is an individual who has attained the age of:
 | 65 years before the end of the renovation period taxation year; or |
| 18 years before the end of the renovation period taxation year and is eligible to claim the disability tax credit at any time in the renovation period taxation year. |
Eligible Individual
An eligible individual in respect of an eligible dwelling for a renovation period taxation year means:
| an individual who ordinarily resides, or intends to ordinarily reside,
in the eligible dwelling within 12 months after the end of the renovation
period and who is
| ||||||||
| an individual who
|
Qualifying Relation
A qualifying relation of a qualifying individual is an individual who
| is at least 18 years of age before the end of the renovation period taxation year; and |
| at any time in the renovation period tax year is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of either the qualifying individual or the cohabiting spouse or common-law partner of the qualifying individual. |
Qualifying Expenditure
Qualifying expenditures are costs that are directly attributable to a qualifying renovation of an eligible dwelling of an eligible individual. The costs must be made or incurred before the end of the renovation period.
These costs can include costs of good or services, permits, and equipment rental in order to complete the qualifying renovation, but not costs for routine maintenance.
Some other costs that are not qualifying expenditures include:
| appliances |
| home-entertainment devices |
| housekeeping, security monitoring, gardening, outdoor maintenance, etc. |
| financing costs |
| goods or services provided by a non-arm's length person, unless they are GST/HST registrants |
| reimbursed costs |
| costs not supported by receipts |
| costs that have been claimed under the Medical Expense Tax Credit and/or the Home Accessibility Tax Credit |
Qualifying Renovation
A qualifying renovation is a renovation or alteration of, or addition to, en eligible dwelling of a qualifying individual that is:
| of an enduring nature and is integral to the eligible dwelling; and |
| enables the qualifying individual to live in the dwelling by creating a secondary unit within the dwelling, for the qualifying individual or the qualifying relation. |
In TI 2023-0960671E5 Carriage house & multigenerational home renos, CRA indicates that the MHRTC can be used toward the new construction of an accessory dwelling unit such as a carriage house or laneway house.
Life in the Tax Lane re MHRTC:
July 2023: MHRTC can be used toward the new construction of an accessory dwelling unit such as a carriage house or laneway house.
September 2023: MHRTC can be used toward the construction of a new dwelling.
Tax Tips/Traps:
Secondary suites and laneway homes may not be eligible for the principal residence exemption!
GST/HST will be payable on the value of a new laneway home when it is first rented long-term.
Eligible Dwelling
An eligible dwelling is:
| a housing unit located in Canada, which could be a share of the capital stock of a co-operative housing corporation acquired for the sole purpose of acquiring the right to inhabit the housing unit owned by the co-operative housing corporation. |
| the principal residence of the qualifying individual at any time in the tax year. |
Generally, a housing unit will be considered to be a qualifying individual's principal residence where it is ordinarily inhabited, or expected to be ordinarily inhabited within that tax year, by the qualifying individual and it is owned, either jointly or otherwise, by the qualifying individual or the qualifying individual's spouse or common-law partner.
Although a person can have only one principal residence at a time, when a an individual moves during the year, there can be two principal residences during that year. In such a situation, the HATC maximum of $10,000 applies to the total cost of qualifying expenses for both residences, NOT for each residence.
If the qualifying individual does not own a principal residence, a dwelling will be considered to be an eligible dwelling if it is the principal residence of an eligible individual in respect of the qualifying individual who ordinarily lives in that dwelling with the eligible individual.
If you earn business or rental income from part of an eligible dwelling, you can only claim the amount for qualifying expenses incurred for the personal-use areas of your dwelling.
What About My Principal Residence Exemption?
If an accessory dwelling unit or carriage or laneway house is built, or a suite with a separate entrance, one must consider the possibility that it may not be eligible for the principal residence exemption.
See:
TI 2024-1009501E5 MHRTC - Principal Residence Exemption and Change in Use and
Life in the Tax Lane November 2024 from Video Tax News
Tax Tips/Traps:
Secondary suites and laneway homes may not be eligible for the principal residence exemption!
GST/HST will be payable on the value of a new laneway home when it is first rented long-term.
See the LinkedIn post (not necessary to be a member to view) by Noah Sarna, Commodity Tax Partner at Thorsteinssons Tax Lawyers, Hidden tax trap in changes to mortgage insurance rules for adding secondary suites.
Superior Court of Ontario Case - Sidhu v. Sidhu ONSC 4618
The article Contributions To Multi-Generational Home Does Not Constitute Unjust Enrichment (Sidhu v. Sidhu) by Isabel Yoo of Gardiner Roberts LLP does not relate to the new MHRTC, but to the complications of a multigenerational home, and how important it is to document the intentions of the living arrangement.
TaxTips.ca Resources
Resources for Persons with Disabilities
Federal and Provincial Home Renovation Tax Credits
Canada Revenue Agency (CRA) Resources
TI 2024-1009501E5 MHRTC - Principal Residence Exemption and Change in Use
Multigenerational home renovation tax credit (MHRTC)
Schedule 12 - Multigenerational Home Renovation Tax Credit
Multigenerational Home Renovation Tax Credit - from Budget 2022
Home Accessibility Tax Credit (HATC)
Revised: October 31, 2024