Across Ontario, more families are looking for ways to bring multiple generations under one roof — or onto one property — without sacrificing anyone’s independence. Sometimes it’s a parent who wants to stay close to grandchildren without moving into a retirement home. Sometimes it’s an adult child with a disability who needs ongoing family support. Sometimes it’s the simple arithmetic of housing affordability.
The federal government recognized this trend in the 2022 budget and created a tax credit designed specifically for these renovations: the Multigenerational Home Renovation Tax Credit (MHRTC). In effect since the 2023 tax year, the credit gives qualifying families up to $7,500 back when they renovate or build to create a self-contained secondary unit for a senior or family member with a disability.
This guide walks through exactly how the credit works, who qualifies, what counts as a qualifying renovation, and the three construction paths Ontario families typically take to claim it. The MHRTC is a real, federally-administered program, but the rules are specific. Reading them carefully before you start is the difference between claiming the full credit and discovering after the fact that a key requirement wasn’t met.
What the MHRTC Actually Is
The Multigenerational Home Renovation Tax Credit is a refundable federal tax credit claimed on your personal income tax return. Refundable means you receive the credit even if you owe no tax — the government issues it as part of your refund.
The math is simple. The credit equals 15% of qualifying renovation expenses, up to a cap of $50,000 in expenses. That works out to a maximum credit of $7,500 per qualifying renovation. If you spend less than $50,000 on qualifying work, you get 15% of what you spent. If you spend more than $50,000, you still claim a maximum of $7,500 — expenses above the cap aren’t counted.
The credit is claimed on Schedule 12 (Line 45355) of your federal T1 personal income tax return, in the tax year that the renovation is completed — not the year construction started. A renovation that breaks ground in November 2025 and finishes in March 2026 is claimed on the 2026 return.
Who Qualifies — The Three Roles
Three distinct roles need to be understood for the credit to apply: the qualifying individual, the eligible individual (who claims the credit), and the eligible dwelling.
The Qualifying Individual
This is the family member the renovation is being done for. They must be either:
- 65 years of age or older at the end of the renovation period tax year, or
- Between 18 and 64 and eligible for the federal Disability Tax Credit (DTC) at any time during the renovation period tax year.
The qualifying individual does not have to live in the dwelling before the renovation begins. The Canada Revenue Agency’s rule is that the qualifying individual must ordinarily inhabit (or reasonably be expected to ordinarily inhabit) the dwelling within 12 months after the renovation period ends. This is a key flexibility — you can build the suite first and have the family member move in later, as long as the intent is clear and they actually move in within the 12-month window.
The Eligible Individual (Who Can Claim)
The eligible individual is whoever is filing the tax return and claiming the credit. The CRA recognizes a broad set of family relationships:
- The qualifying individual themselves
- The qualifying individual’s spouse or common-law partner
- A parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, or nephew of the qualifying individual (or of their spouse/common-law partner)
If multiple eligible individuals share renovation costs, they can each claim part of the credit — but the combined total claimed across all of them cannot exceed $50,000 in qualifying expenses per qualifying renovation. In practice this means a $7,500 maximum credit per qualifying renovation, regardless of how many family members chip in.
The Eligible Dwelling
The home being renovated must be owned (jointly or not) by the qualifying individual or one of the qualifying relations during the renovation period tax year. It must be ordinarily inhabited (or reasonably expected to be inhabited) by both the qualifying individual and a qualifying relation within 12 months after the renovation period ends. Investment properties, vacation homes, and dwellings where the family relationship isn’t present don’t qualify.
What Counts as a Qualifying Renovation
This is where the rules get specific. To qualify for the MHRTC, the renovation must create a new, self-contained secondary unit. The CRA defines a secondary unit as a private living space that includes all four of the following:
- A private entrance separate from the main dwelling
- A kitchen (sink, cooking facility, refrigeration, food preparation area)
- A bathroom
- A sleeping area
Existing secondary suites already built to that standard do not qualify — the renovation must actually create the new unit. Cosmetic updates to a pre-existing in-law suite don’t count. The renovation must also meet all applicable local permits, codes, and zoning by-laws. An illegally-built secondary suite doesn’t qualify for the credit, regardless of how much you spent.
One last critical detail: the renovation must be completed in the tax year for which you claim the credit. If construction crosses into the next year, you claim it the year the work finishes — not the year it started.
Three Construction Paths That Qualify
Ontario families typically choose one of three approaches to create a qualifying secondary suite. Each has different scope, complexity, and considerations.
Converting an existing portion of the home into a self-contained suite. Common variations include finished basement apartments, attic conversions, addition-based in-law suites, or carving out a section of the main floor with its own entrance.
This path is typically the lowest-cost option because much of the structural shell already exists. The work focuses on framing the partition walls, running separate plumbing and electrical, installing the kitchen and bathroom, and creating the private entrance. Permits are required and zoning rules vary by municipality.
Building a separate, detached secondary dwelling on the same lot — a garden suite, carriage house, or laneway house. The CRA has explicitly confirmed in Technical Interpretations (notably TI 2023-0960671E5) that these detached units qualify for the MHRTC, provided they meet local zoning, permits, and building codes.
This path requires more land, more capital, and more approvals than an in-home conversion — but it offers complete privacy and independence for the qualifying individual. It also produces a standalone asset that can serve other purposes long after the original need. Kitchener, Waterloo, and Cambridge have all updated their zoning to permit detached ADUs in many residential zones.
Building a new custom home that includes a self-contained secondary suite from day one. The CRA confirmed in 2023 that new construction qualifies, not just renovations of existing dwellings.
This path makes sense when a family is already planning to build new and wants to design the secondary suite as an integral part of the home rather than an addition or retrofit. Cost-per-square-foot is typically lower than renovating because the work is being done as part of one continuous build.
The right path depends on the property, the family situation, the qualifying individual’s mobility and care needs, the budget, and the timeline. In our experience, families who plan five-plus years ahead almost always end up considering the detached ADU path seriously — the privacy and independence it offers an aging parent is hard to match with an in-home conversion.
The case study that defined how we think about this
Caliber built a 912 sq ft detached garden suite in Kitchener for an aging family member — one of the first detached ADUs permitted in the City of Kitchener’s pilot garden suite program. It’s the exact scenario the MHRTC was designed for: a self-contained secondary unit on a single-family property, built for a parent to live close to family with full independence and dignity.
The case study walks through the design choices, the permit pathway, the build through a Kitchener winter, the Passive House-tier airtightness, and what the operating costs look like three winters in.
Read the Garden Suite Case Study →The Stackable Tax Credit Picture
The MHRTC is the largest single credit available for this type of work, but it’s not the only one. Several federal and provincial programs may also apply, depending on the specifics of the project and the qualifying individual’s situation. Importantly, you cannot claim the same expense under more than one credit — if you put a particular receipt toward the MHRTC, that same dollar cannot also be claimed under HATC. But a single renovation often has distinct categories of expense that can be allocated across different credits.
You may come across older articles mentioning the Ontario Seniors’ Home Safety Tax Credit (a 25% credit on $10,000 in accessibility renovation expenses). That credit was a temporary measure for the 2021 and 2022 tax years only and is no longer available. Don’t factor it into 2026 planning.
The credits worth focusing on for renovation work are the MHRTC and HATC. A family doing a $200,000 renovation that creates a secondary suite with significant accessibility features — curbless shower, widened doorways, lever hardware, wall blocking for grab bars — might allocate the suite-creation expenses to the MHRTC and the dedicated accessibility upgrades to the HATC. The right allocation is something a tax professional should review based on your specific expense ledger.
What’s NOT Eligible
The CRA is specific about what doesn’t count toward the MHRTC, even within an otherwise qualifying renovation:
- The value of your own labour if you do the work yourself
- Tools and equipment you purchase to do the work (equipment rental is eligible)
- Household appliances (fridge, stove, dishwasher, washer/dryer)
- Electronic devices (smart home systems, security cameras, audio-visual equipment)
- Routine repair or maintenance
- Purely cosmetic updates not connected to creating the secondary unit
- Outdoor maintenance and gardening work
- Financing costs (mortgage interest, loan fees)
- Housekeeping or security monitoring
- Work done by a non-arm’s-length party (such as a family member’s business) unless that party is GST/HST registered and charges GST/HST on the work
- Any expense already claimed under the HATC or Medical Expense Tax Credit (no double-dipping)
What is eligible: contracted construction work (framing, electrical, plumbing, drywall, flooring, finishes), professional services (architects, designers, engineers), permit fees, equipment rental, and the materials and goods that go into the build.
City-Specific Permit Notes
Each municipality has its own zoning rules and permit processes for secondary suites. A few notes on the cities Caliber serves:
Kitchener. The City of Kitchener has actively encouraged ADUs and secondary suites under both provincial Bill 23 (More Homes Built Faster Act) and its own pilot programs. Detached additional dwelling units are now permitted in most residential zones, subject to specific lot size, setback, and height requirements. The City was an early mover on detached ADUs and has refined its process based on early projects.
Waterloo. Similar zoning permissions apply, with the City of Waterloo allowing secondary suites in most residential zones. Specific requirements vary by neighbourhood and lot configuration.
Cambridge. Cambridge permits secondary suites and is generally supportive of multigenerational housing in established neighbourhoods. Heritage zoning in parts of Galt may add additional layers of approval.
Paris and Brant County. Brant County has secondary suite provisions in its zoning by-laws, with detached ADUs increasingly permitted as part of provincial housing policy. Rural lots often have more flexibility than urban lots in terms of size and placement.
Before committing to a path, a pre-application consultation with your municipality’s building department is worth the time. It surfaces zoning constraints, lot-specific issues, and process expectations before drawings are commissioned.
Practical Guidance Before You Start
Keep every receipt. The CRA can request documentation supporting your claim, and the rules around what counts are specific enough that you want every invoice, every change order, and every permit receipt organized and accessible.
Get clear on the qualifying individual’s eligibility before committing. If the qualifying individual is between 18 and 64, confirm their Disability Tax Credit eligibility is in place. The DTC has its own application process and can take months. Don’t assume eligibility.
Work with a contractor who understands the documentation requirements. The CRA may want to see that the work created a self-contained secondary unit meeting the four-part test (entrance, kitchen, bathroom, sleeping area). Your contractor’s invoices, scope-of-work documents, and final inspection records form part of the documentary record.
Get tax-professional advice before claiming. The MHRTC interacts with other tax considerations — potential capital gains implications if the secondary unit is later rented or sold, GST/HST implications on new laneway homes, principal residence exemption questions for detached secondary units. A CPA or tax-focused accountant can help you allocate expenses optimally across the MHRTC and HATC, and flag the broader tax implications of your specific situation.
Plan for the renovation to complete in a single tax year. Because the credit is claimed in the year the work is completed, a project that finishes in early January means waiting a full year longer to claim than one finishing in late December. Not a reason to rush bad work, but worth considering when scheduling.
Frequently Asked Questions
Up to $7,500. The credit is 15% of qualifying expenses, with a cap of $50,000 in eligible expenses per qualifying renovation. It is refundable, meaning you receive it even if you owe no tax.
Yes. The Canada Revenue Agency has confirmed in Technical Interpretations that the MHRTC applies to detached secondary units such as carriage houses, laneway houses, and garden suites, provided they meet local zoning, permits, and building codes.
A qualifying individual is a senior (65 or older at the end of the renovation tax year) or an adult aged 18 to 64 who is eligible for the federal Disability Tax Credit (DTC). The qualifying individual does not have to live in the dwelling before the renovation begins, but must ordinarily inhabit it within 12 months after the renovation completes.
Yes. Costs can be split between eligible family members, but the total claimed across all individuals cannot exceed $50,000 in qualifying expenses per qualifying renovation. The maximum total credit available across all claimants is $7,500 per renovation.
You cannot claim the same expense under both credits. However, a single renovation often includes distinct expenses that can be allocated across the two credits — for example, allocating suite-creation expenses to the MHRTC and dedicated accessibility upgrades (curbless shower, grab bars, widened doorways) to the HATC. A tax professional should review your specific expense ledger to allocate optimally.
In the tax year that the renovation is completed, regardless of when construction started. You claim it on Schedule 12, Line 45355 of your T1 personal income tax return.
The CRA rule is that the qualifying individual must ordinarily inhabit the dwelling (or reasonably be expected to ordinarily inhabit it) within 12 months after the renovation period ends. Genuine intent matters — document the plan, the family discussions, and any reasons for delays.
The MHRTC applies to qualifying expenses incurred after December 31, 2022, and to renovations completed in or after the 2023 tax year. If your renovation completed before 2023, it doesn’t qualify. If your renovation finished in 2023, 2024, or 2025, you would have claimed it on that year’s return; you may still be able to file an adjustment (T1-ADJ) if you missed it.
Potentially. A secondary unit may affect your principal residence exemption when you eventually sell the property, particularly if the secondary unit is later rented out commercially. This is one of the most important reasons to discuss the project with a qualified tax professional before building.
No. We’re a construction firm, not a tax advisor. What we do is build the renovation to the standard required by the program — meeting permits, codes, and the four-part secondary unit test — and provide the documentation (invoices, scope of work, completion records) that supports your claim. The actual claim is filed by you and your accountant.
Related Reading
Planning a multigenerational renovation?
If you’re thinking about creating a secondary suite for an aging parent or family member with a disability across Kitchener, Waterloo, Cambridge, or Paris, we can help you think through the construction approach, the timing, and the path that fits your property best. The tax credit work happens with your accountant; the build work happens with us.
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