Multigenerational Home Renovation Tax Credit: A Toronto Guide
If you are building a space for a parent or grandparent to live with you, there is a federal tax credit that most families never claim — often because they finish the work before they find out it exists.
The short answer: the Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal credit worth 15% of up to $50,000 in qualifying renovation expenses — a maximum of $7,500. It applies when you create a self-contained secondary unit for a family member who is 65 or older, or who is 18 to 64 and eligible for the Disability Tax Credit.
Refundable matters. You receive the money even if you owe no tax — it comes back as part of your refund rather than reducing a bill.
Here is how it works, what qualifies in Toronto, and the timing detail that catches families out.
How Much It Is Worth
The calculation is straightforward. The credit equals 15% of qualifying expenses, capped at $50,000 of expenses per qualifying renovation.
- Spend $30,000 on qualifying work — claim $4,500
- Spend $50,000 — claim the full $7,500
- Spend $200,000 — still claim $7,500, as expenses above the cap are not counted
You may claim more than one qualifying renovation in the same year. But only one MHRTC claim can be made in respect of a given qualifying individual during their lifetime — so if you build a suite for your mother, that is the one claim available for her.
If there is more than one eligible individual claiming, the $50,000 maximum is split between them.
Who Qualifies
Two people matter: the person moving in, and the person claiming.
The qualifying individual — the person the unit is for — must be either 65 or older by the end of the renovation period tax year, or between 18 and 64 and eligible for the Disability Tax Credit.
The qualifying relation — the person claiming — must be a close family member. That includes a parent, grandparent, child, grandchild, sibling, aunt, uncle, niece or nephew, and extends to your spouse’s or common-law partner’s relatives.
The qualifying individual must intend to occupy the secondary unit within twelve months of the renovation being completed.
One point families are often relieved to hear: the unit does not need to be rented at market rate, or at all. The credit is for housing a family member, not a tenant. Charging nothing does not affect eligibility.
What Counts as a Secondary Unit
This is where the credit intersects with what we build, and where Toronto homeowners have more options than most.
The renovation must create a self-contained unit — its own private entrance, kitchen, bathroom and sleeping area. A bedroom and bathroom added to the existing home does not qualify. The space has to function independently.
It must also be newly created, or created from existing space that did not already meet local requirements to be a secondary dwelling unit. Converting a space that was already a legal secondary suite does not qualify.
And it must meet applicable local requirements, permits, codes and by-laws. This is not optional fine print — an unpermitted suite is not a qualifying renovation.
In Toronto, that opens up several routes:
- A basement or lower-level suite within the existing home
- A rear or side addition designed as an in-law suite
- A garage conversion
- A laneway suite or garden suite in the rear yard
That last one is worth emphasising, because many families assume the credit only applies to work inside the house. A detached suite on the same property can qualify, provided it meets the self-contained test and municipal requirements.
The Timing Detail That Catches People Out
The credit is claimed for the tax year in which the renovation is completed, regardless of when it started.
Start work in 2026 and finish in 2027, and you claim it on your 2027 return — filed in spring 2028. That is a meaningful gap between spending the money and receiving the credit, and it should be planned for rather than assumed.
It matters more in Toronto than elsewhere, because the approval timeline is long. A detached suite typically runs 12 to 18 months from design to completion, with a substantial portion of that in zoning review and permitting before construction starts. If a design requires a minor variance, add three to four months more.
The practical implication: if you are planning this work with a specific tax year in mind, the conversation needs to start well before you think it does.
What Expenses Qualify
Qualifying expenditures are those reasonably attributable to the qualifying renovation — labour, professional services, building materials, fixtures, equipment rentals and permits.
Expenses must be reduced by any reimbursements, rebates or other credits received in respect of the same work. You cannot claim the same dollar twice across multiple programs.
Keep every receipt and proof of payment. The claim is made on your personal income tax return and CRA may ask for documentation.
Other Credits, and One That No Longer Exists
The MHRTC is not the only program relevant to this kind of work.
The Home Accessibility Tax Credit covers renovations that improve accessibility or safety for a qualifying individual — grab bars, curbless showers, widened doorways, ramps, lever hardware. Where a project creates a secondary suite and includes substantial accessibility work, there may be scope to allocate expenses between the two. How to allocate them is a question for a tax professional working from your actual expense ledger.
One to ignore: the Ontario Seniors’ Home Safety Tax Credit appears in a lot of older articles. It was a temporary measure for the 2021 and 2022 tax years only and is no longer available. Do not factor it into current planning.
How This Fits a Real Project
It is worth being clear-eyed about scale. A $7,500 credit against a suite that may cost $150,000 to $500,000 is helpful, not transformative.
What makes it worth attending to is that it is refundable, it requires no application beyond your tax return, and it is money most eligible families simply never claim. Combined with the practical case for multigenerational living in a city where housing an aging parent separately is extraordinarily expensive, it reduces the cost of a decision many Toronto families are making anyway.
The thing that would actually cost you money is building a suite that does not meet the self-contained test, or doing the work without proper permits. Both disqualify the claim, and both are avoidable with planning.
Frequently Asked Questions
How much is the Multigenerational Home Renovation Tax Credit worth? Up to $7,500 — 15% of a maximum $50,000 in qualifying expenses per qualifying renovation. It is refundable, so you receive it whether or not you owe tax.
Does a laneway suite or garden suite qualify? It can, provided it is on the same property, is self-contained with its own entrance, kitchen, bathroom and sleeping area, meets Toronto’s permit and zoning requirements, and houses a qualifying individual.
Does the secondary unit need to be rented out? No. The credit is for housing a family member. You can charge nothing at all without affecting eligibility.
When do I claim it? For the tax year in which the renovation is completed, not when it started or when you paid. On a Toronto ADU project running 12 to 18 months, that often means the year after you commit to the work.
Can I claim it more than once? You may claim more than one qualifying renovation in a year, but only one claim may be made in respect of any given qualifying individual during their lifetime.
Does a bedroom and bathroom addition qualify? No. The unit must be self-contained — private entrance, kitchen, bathroom and sleeping area. Extra rooms within the existing home do not meet the test.
What if the renovation is not permitted? It will not qualify. The unit must meet applicable local requirements, permits, codes and by-laws. This is one of several reasons unpermitted work is a false economy.
Planning a Suite for a Family Member?
If you are considering a suite for a parent or grandparent — inside the home, as an addition, or as a laneway or garden suite — the timing and the permitting matter as much as the design, both for the project and for the claim.
Schedule a consultation with Novacon Construction.
This article is general information about a federal tax credit and is not tax advice. Eligibility depends on your circumstances, and the rules can change. Confirm your position with a qualified accountant or tax professional, and consult the Canada Revenue Agency for current requirements before making decisions.
Novacon Construction is an award-winning design-build company based in Toronto, Ontario. Specializing in custom homes, major home additions, and ADUs, Novacon has been delivering high-quality residential construction since 2004.
Experience the difference of what working with a real client-centric contractor specialist feels like.
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