Somewhere between deciding your parent is moving in and pouring the footings for the new unit, someone – a contractor, a realtor, a well-meaning brother-in-law – will mention the Multigenerational Home Renovation Tax Credit. Usually with the number “$7,500” attached, said with the confidence of a person who read it once in 2023 and never checked again.
I want to walk through what this credit is, what it actually pays in the year you’d claim it, and where it fits in a build decision you were probably making anyway. This is the twelfth deep dive in the elderly parents moving in series, and it pairs directly with the earlier post on whether to build a secondary unit or just buy a bigger house. The tax credit does not change that decision. But if you’re already building, you should at least claim it correctly.
What the Multigenerational Home Renovation Tax Credit Actually Is
The Multigenerational Home Renovation Tax Credit (MHRTC) is a federal, refundable tax credit that has existed since the 2023 tax year. You claim it on Line 45355 of your T1 return, and you calculate it on Schedule 12.
Two words there matter. Federal means it’s the same across Ontario, Alberta, and everywhere else – there is no separate provincial version stacked on top, though provinces sometimes run their own smaller senior-renovation credits. Refundable is the more interesting one. Most tax credits only reduce tax you owe; if you owe nothing, they do nothing. A refundable credit pays out regardless. If your parent is the one claiming it and they have little taxable income, they still get the money as a refund. That’s genuinely useful, and I’ll come back to it.
The credit exists to help you build one specific thing: a self-contained secondary unit so that a senior, or an adult who qualifies for the Disability Tax Credit, can live with family. It is not a general “we renovated for grandma” credit. The unit is the point.
The Number Everyone Quotes Is Already Wrong
Here is the part nobody updated. The headline figure you’ll hear is 15 percent of up to $50,000 in expenses, for a maximum of $7,500 back. That was true for the 2023 and 2024 tax years. It is no longer true.
The credit rate isn’t a fixed 15 percent. It’s tied to the lowest federal personal income tax rate – the “appropriate percentage” in tax-speak. Bill C-4 cut that rate: down to 14.5 percent for 2025, and down to 14 percent for 2026 and beyond. The credit followed it down.
So the real maximum, by the tax year the renovation is completed:
- 2023 and 2024: 15% of $50,000 = $7,500
- 2025: 14.5% of $50,000 = $7,250
- 2026 and later: 14% of $50,000 = $7,000
The CRA’s own Line 45355 page now states the reduced figure. Most contractor blogs and realtor handouts still say $7,500. If you see that number in 2026, the source is stale.
A note if you click through to verify: the CRA page maps to a specific tax year and, at the time of writing, displays the 2025 figures (14.5% and $7,250). This post leads with the 2026-and-later numbers (14% and $7,000). Both are correct – they just apply to different completion years. Match the figure to the year your renovation is actually completed.
Verify-at-publish: confirm the credit rate and dollar maximum for the specific tax year the renovation is completed, since the underlying rate is what shifted and could shift again.
Who Counts as a “Qualifying Individual”
The credit revolves around a qualifying individual – the person the unit is being built for. That’s either a senior who is 65 or older by the end of the renovation year, or an adult 18 or over who is eligible for the Disability Tax Credit.
Then there’s the person who actually claims it, the eligible individual. That’s a Canadian resident who is a relative of the qualifying individual – parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew, including in-law relationships through a spouse or common-law partner. In the typical case in this series, your parent is the qualifying individual and you are the eligible individual claiming the credit.
The claimant (or the qualifying individual) has to own the dwelling, and both of them have to ordinarily reside there – or intend to, within 12 months of the renovation wrapping up. This is a live-together credit. You cannot build a unit across town and claim it. For the dynamics of everyone actually living under one roof, the multigenerational household postcovers the part the tax form doesn’t.
What Counts as a “Secondary Unit” – and Where People Get Burned
This is the requirement that quietly disqualifies people. The renovation has to create a self-contained secondary unit, and the CRA is specific about what “self-contained” means. The unit needs all four of these:
- A private entrance
- A kitchen
- A bathroom
- A sleeping area
Miss one and it isn’t a qualifying renovation. Adding a bedroom and a three-piece bath to your basement so your father has his own space is a lovely thing to do. It is not, by itself, a secondary unit – there’s no kitchen and no private entrance, so it doesn’t qualify.
Two more traps. First, the unit has to be newly created. Cosmetically updating an in-law suite that already met the four-part standard doesn’t count; the renovation has to bring the unit into existence. Second, it has to meet local permits, codes, and bylaws. In Ontario, additional residential units are broadly permitted now, but “permitted” still means “permitted, with the right approvals.” The credit assumes a legal unit. The land itself is generally capped at half a hectare (about 1.24 acres) counted as part of the dwelling.
What You Can and Can’t Claim
Qualifying expenditures are the reasonable costs directly attributable to the renovation: work by professionals like electricians, plumbers, carpenters, and architects; building materials; fixtures; permit fees; and equipment rental. Keep every receipt. The CRA can ask.
What doesn’t count is a longer list than people expect:
- Your own labour and tools. Sweat equity earns you a nicer unit, not a bigger credit.
- Work by a non-arm’s-length person – unless they’re registered for GST/HST. If your cousin the contractor does the build off the books, those costs are out. If your cousin the contractor invoices you properly through a GST/HST-registered business, they’re in.
- Appliances, furniture, and electronics. The fridge and the TV are not renovation costs.
- Routine repairs, maintenance, and financing costs.
- Anything already claimed elsewhere. You cannot claim the same dollar under both the MHRTC and either the Home Accessibility Tax Credit or the medical expense tax credit.
You also have to reduce your claim by any amount reimbursed – a rebate, a grant, an insurance payout. The credit is on your net out-of-pocket cost, not the gross invoice.
The Once-Per-Lifetime Catch
There is one MHRTC claim per qualifying individual, ever. Not per year – per lifetime. Build a unit for your mother and claim the credit, and that’s the only MHRTC claim tied to her. If she later moves, or the family reconfigures and someone builds again, there’s nothing left to claim for her.
You claim it in the tax year the renovation is completed, regardless of when it started. A build that breaks ground in 2025 and passes final inspection in 2026 is a 2026 claim – at the 2026 rate. So don’t burn the once-in-a-lifetime claim on a small conversion if a larger, more expensive build is genuinely coming. And if two eligible relatives shared the cost, they can split the claim, but the combined total still can’t exceed the $50,000 expense cap for that one renovation.
Stacking With the Home Accessibility Tax Credit
If your build also includes accessibility work – a curbless shower, widened doorways, grab-bar blocking, lever hardware – the Home Accessibility Tax Credit (HATC) is a separate credit that may apply to those specific costs. You can use both credits on the same project, but not on the same dollars. The practical move is to allocate: suite-creation costs to the MHRTC, dedicated accessibility upgrades to the HATC.
The catch is that HATC is non-refundable, so it only helps if there’s tax owing to offset, and its rate is tied to the same lowest federal percentage that just dropped. Which credit each expense belongs to is exactly the kind of allocation a tax preparer should review against your actual receipts.
Verify-at-publish: confirm the HATC expense limit and rate for the claim year, since it moved with the same rate change.
Does the Math Even Change Your Decision?
Let’s be honest about scale. A real secondary suite in Ontario – permits, foundation, plumbing, electrical, finishes – runs well into six figures. A detached unit can run past $200,000. On a $200,000 build, a $7,000 credit is about three and a half percent. It’s a nice cheque. It is not a reason to build.
I say that because the credit gets sold backwards. Nobody should be talked into a self-contained unit for the tax credit. The credit is a partial rebate on a decision you make for family, care, and living arrangements – the things the rest of this series is actually about. Let the secondary unit versus bigger house analysis drive the build. Let the MHRTC be the modest thank-you at the end.
Where it genuinely matters is the refundable angle. If your low-income parent owns the home and claims it, they collect the full credit as cash even with no tax to offset. That’s real money to a household on OAS and GIS – and worth coordinating carefully, because how money moves around a low-income parent can affect their benefits.
Where This Fits in the Rest of the Series
The MHRTC doesn’t operate in isolation. If you’re going to charge your parent rent on the new unit, that’s a separate income question the credit is silent on. If you’re supporting them financially, the claim-a-parent-as-dependant rules are a different lever entirely. And if the plan is aging in place with support, the home care piece matters more than any renovation credit. The credit is one line on one return. The living arrangement is the whole thing.
What I’d Actually Do
- Decide on the build first, credit second. If a self-contained unit is the right call for care and space, the ~$7,000 is a bonus. If it isn’t, no credit makes it right.
- Build to the four-part standard on purpose. Private entrance, kitchen, bathroom, sleeping area – with permits. Half-measures don’t qualify, and you don’t want to discover that at tax time.
- Use GST/HST-registered trades and keep every receipt. Family labour off the books earns nothing here. A proper invoice does.
- Claim in the completion year, at that year’s rate. For a 2026 completion, that’s 14 percent and a $7,000 ceiling – not the $7,500 the internet still repeats.
- Have your parent claim it if they’re the low-income owner. Refundable means they get the cash regardless of tax owing.
- Don’t waste the once-per-lifetime claim on a small job if a bigger qualifying build is genuinely coming.
- Coordinate the HATC allocation if there’s real accessibility work, and let a preparer split the expenses correctly.
This post documents how I think through the MHRTC as part of a real family decision. It is not tax, legal, or financial advice, and I’m not your accountant. Tax rates and dollar limits tied to the lowest federal personal income tax rate have changed recently and can change again – confirm the figures for your specific claim year against current CRA guidance, and get a qualified tax professional to review your actual expense ledger before you file. Ontario is the default jurisdiction here; your province’s rules and any local permitting requirements may differ.