Multigenerational Home Renovation Tax Credit Guide 2026

1. What the Multigenerational Home Renovation Tax Credit Is

The Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal tax credit for certain renovation expenditures incurred to create a self-contained secondary unit within or on the property of an eligible dwelling. The secondary unit must allow a qualifying individual, who is generally a senior or an adult eligible for the Disability Tax Credit, to live with a qualifying relation. For the 2025 tax year, which is generally the return filed in 2026, CRA states that the credit is 14.5% of qualifying expenditures up to a maximum of $50,000, producing a maximum credit of $7,250.

2. The Secondary Unit Must Be a Real Self-Contained Dwelling

CRA defines a secondary unit as a self-contained housing unit with a private entrance, kitchen, bathroom and sleeping area. It must be newly constructed or created from an existing living space that did not already meet the local requirements to be considered a secondary dwelling unit. The unit must also comply with applicable local requirements, including permits, building codes and municipal bylaws.

3. Who Is the Qualifying Individual

The qualifying individual is the senior or adult with a disability for whom the secondary unit is being created. For the relevant renovation-period tax year, the person must generally be at least 65 years old by the end of the year, or be 18 to 64 and eligible for the Disability Tax Credit under the statutory rules.

4. Qualifying Relations and Who May Claim

The MHRTC is designed around multigenerational living rather than simply building a rental apartment. A qualifying relation generally must be at least 18 and be a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual or of the qualifying individual's cohabiting spouse or common-law partner. An eligible individual who claims the credit must meet the statutory Canadian-residency, residence and relationship/ownership requirements.

5. Eligible Dwelling Requirements

The eligible dwelling must be located in Canada and must satisfy detailed ownership and occupancy conditions. The qualifying individual or a qualifying relation, or an eligible trust structure specified in the legislation, must own the housing unit during the renovation-period taxation year. The dwelling must ordinarily be inhabited, or reasonably expected to be ordinarily inhabited, by both the qualifying individual and a qualifying relation within 12 months after the renovation period ends.

6. Renovation Timing: When You Claim the Credit

The MHRTC is claimed for the tax year in which the qualifying renovation period ends, even when construction started in an earlier year. The renovation period begins when the first qualifying expenditure is made or incurred and ends when the qualifying renovation is completed. CRA gives examples such as the final inspection or other proof of project completion as evidence of completion.

7. Maximum $50,000 Expenditure and 2025 $7,250 Credit

For the 2025 tax year, an eligible individual can claim up to $50,000 of qualifying expenditures for one qualifying renovation. CRA calculates the refundable credit at 14.5%, giving a maximum of $7,250. If more than one eligible individual claims the same renovation, their combined qualifying expenditures cannot exceed $50,000.

8. Sharing Renovation Costs Between Family Members

More than one eligible individual can potentially claim the MHRTC for the same qualifying renovation when they share the renovation costs and otherwise satisfy the eligibility rules. The combined claims cannot exceed $50,000 of qualifying expenditures. Each claimant should retain evidence of the expenses they personally incurred.

9. Expenses You Can Claim

A qualifying expenditure must be reasonable, directly attributable to the qualifying renovation and made or incurred by the eligible individual or a qualifying trust arrangement. CRA lists professional goods and services and a range of DIY-related expenditures that can qualify.

10. Expenses That Do Not Qualify

The MHRTC does not cover every cost connected with a renovation. CRA specifically excludes several categories, and the expense must also be unsupported by reimbursement and documentation issues.

11. DIY Renovations and Family Contractors

The MHRTC does not require the homeowner to hire a third-party general contractor. If the taxpayer performs the work personally, CRA permits certain out-of-pocket costs such as building materials, fixtures, equipment rentals, plans and permits. The taxpayer cannot claim the value of their own labour or tools. A family member's work can be eligible only where the statutory related-party exception is satisfied, including GST/HST registration.

12. Local Permits, Building Codes and Secondary-Unit Legality

CRA's eligibility checklist expressly requires the secondary unit to meet applicable local requirements, permits, codes and bylaws. A taxpayer should therefore confirm the municipality's secondary-suite requirements before starting the renovation and retain copies of permit applications, approvals and final inspections.

13. The Secondary Unit Can Be Inside or on the Property

The secondary unit does not have to be physically inside the main house. CRA permits a separately constructed secondary unit located on the same eligible land, provided the eligible dwelling and occupancy requirements are met. The secondary unit still must meet the self-contained housing-unit definition and applicable local requirements.

14. The One-Renovation Lifetime Rule

The Income Tax Act permits only one qualifying renovation in respect of a qualifying individual during that individual's lifetime. This is a lifetime restriction tied to the qualifying individual, not an unlimited annual program. Multiple eligible individuals can claim the same qualifying renovation if they are otherwise entitled, but the combined qualifying expenditures for that renovation remain capped at $50,000.

15. MHRTC and Other Renovation Credits

MHRTC interacts with other federal renovation-related credits. CRA expressly excludes expenses already claimed under the Medical Expense Tax Credit or Home Accessibility Tax Credit from qualifying MHRTC expenditures. The same expense should therefore not be counted twice under overlapping renovation credits.

16. Claiming the MHRTC on the 2026 Filing

For the 2025 tax year filed in 2026, the taxpayer completes Schedule 12, Multigenerational Home Renovation Tax Credit, and enters the calculated amount on Line 45355 of the T1 return. The claim is made for the year in which the renovation period ended.

17. Documentation and CRA Review

CRA requires supporting documentation for MHRTC claims. Receipts and invoices should identify the supplier and the goods or services supplied, and the taxpayer should be able to demonstrate that amounts were paid or incurred by the eligible individual and directly related to the qualifying renovation.

18. 2025 Filing-Season Calculation Examples

The following examples use the 2025 MHRTC rate applicable to a return filed in 2026.

19. Common MHRTC Mistakes to Avoid

The most frequent errors arise from confusing MHRTC with the Home Accessibility Tax Credit or treating the $50,000 amount as a general renovation rebate.

20. Step-by-Step MHRTC Filing Workflow

The correct MHRTC workflow starts with the qualifying people and dwelling, then verifies the secondary unit, renovation timing, expenditures and filing schedule.

21. Quick Decision Framework

Use this sequence before claiming MHRTC.

Frequently Asked Questions