Multigenerational Home Renovation Tax Credit: Who Qualifies

Building a suite so a parent aged 65 or older, or an adult relative eligible for the disability tax credit, can live with you may earn the federal Multigenerational Home Renovation Tax Credit (MHRTC). It pays 14.5% of up to $50,000 of qualifying costs on work completed in 2025 and 14% on work completed in 2026. The unit must be self-contained, with its own entrance, kitchen, bathroom and sleeping area, or none of it counts.

How much the multigenerational credit is worth

For renovations completed in 2025, the CRA sets the credit at 14.5% of qualifying costs or $50,000, whichever is less, so the most it pays is $7,250. It works as a refundable credit: the Income Tax Act treats it as tax already paid, so any part of it above the tax you owe comes back as a refund. In the CRA's own example, a $7,250 credit against a $2,000 balance owing produces a $5,250 refund.

For 2026, section 122.92 of the Income Tax Act calculates the credit at the "appropriate percentage", which section 248 defines as the lowest federal tax rate. Finance Canada puts that rate at 14.5% for 2025 and 14% for 2026 and later years, so a renovation completed in 2026 earns at most $7,000.

Who qualifies for the MHRTC

Three people have to line up: the relative the unit is built for, the family member they will live with, and the person who files the claim. The CRA's eligibility rules set each one:

The home must be in Canada and owned, alone or jointly, by the qualifying individual or a qualifying relation. Both of them must live there, or expect to, within 12 months after the renovation ends, and the land that goes with it is usually limited to half a hectare.

The credit fits these cases:

• A parent or grandparent aged 65 or older moving into a new suite in an adult child's house.
• An adult son or daughter eligible for the disability tax credit getting a self-contained unit in the family home.
• A garden or laneway unit built on the same lot as the main house for a senior relative.
• A new addition, or a basement that did not already meet the local rules for a secondary unit, turned into one.

It does not apply to:

• A suite that already met the local secondary-unit rules before the work, however much you spend renovating it.
• A unit missing any of the four parts, such as a bedroom and bathroom with no kitchen.
• A second renovation for the same person: only one can be claimed for a qualifying individual in their lifetime.
• A unit the relative and the family do not move into within 12 months of completion.

What the secondary unit must include

The CRA defines a secondary unit as a self-contained housing unit with a private entrance, a kitchen, a bathroom and a sleeping area. It can be new construction or made from existing space, such as a basement, that did not already meet the local rules for a secondary unit, and a detached unit counts if it sits on the same land as the main home.

The unit also has to meet the local requirements, permits, codes and bylaws, which ties the credit to the building permit: a suite built without one fails the test. The rules for a legal basement suite differ by province, from fire separation to ceiling height, and Ontario calls the unit a second or additional residential unit where BC and Alberta say secondary suite.

Which expenses count toward the $50,000

A qualifying expense is a reasonable cost directly attributable to building the unit. The CRA splits them this way:

An expense already claimed for the medical expense tax credit or the home accessibility tax credit cannot be claimed again for this one. A grab bar or a curbless shower in the suite goes on one credit or the other, so decide which before you file.

How to claim the credit on line 45355

The CRA's claim instructions come down to four steps:

1. Claim it for the year the work is completed. The renovation period runs from the first qualifying expense to completion, and the credit goes on the return for the tax year the renovation was completed.
2. Fill in Schedule 12 with the qualifying expenses, and claim the credit on line 45355 of the return, the line used from the 2024 tax year on.
3. Share the claim if more than one person paid. Several eligible individuals can claim for the same renovation, up to $50,000 of costs between them, and if they cannot agree on the split the CRA can set each share.
4. Keep the records: each invoice with the vendor's name, business address and any GST/HST number, a description and date of the purchase, the amount, and proof that it was paid in full.

What the credit covers on a suite or an addition

The $50,000 cap sits below the price of most new suites. A legal basement suite runs $55,000 to $95,000 in Calgary and $95,000 to $135,000 and more in an Edmonton basement on builders' 2026 figures, so most suites use the cap in full and the credit returns roughly 5% to 13% of the bill.

A rear or side addition costs $350 to $550 or more a square foot in Toronto on a builder's price guide, so a 400 square foot addition built as a self-contained unit for a parent passes the $50,000 cap long before it is finished.