The Multigenerational Home Renovation Tax Credit (MHRTC) pays back part of the cost of building a self-contained suite so a parent 65 or older can live with you. For the 2025 tax year, the Canada Revenue Agency (CRA) puts it at 14.5% of up to $50,000 in costs. That is up to $7,250 for each qualifying renovation (canada.ca, checked October 22, 2026).
It is refundable, which means you can get it back even if you owe no tax. That makes it worth knowing before you hire a contractor, not after.
Below: what the credit pays now, the seven rules a project must meet, who can claim, which costs count, and how to claim it at tax time.
What is the $7,500 home renovation tax credit?
The "$7,500 home renovation tax credit" is the Multigenerational Home Renovation Tax Credit. When it began, it was 15% of up to $50,000, which is $7,500. The credit follows the lowest federal income tax rate, and that rate has dropped. CRA's current page, for the 2025 tax year, says 14.5% and up to $7,250.
The lowest federal rate is 14% for 2026, according to CRA's 2026 tax rate tables. So a suite finished in 2026 would earn up to $7,000. CRA had not posted its 2026 version of the credit's page when we checked, so confirm the figure when you file.
The credit is meant for one situation: a family adding a second, separate home inside or beside their house so generations can live together. It is not a general renovation credit. A new kitchen in your own part of the house does not qualify.
If you are thinking about smaller safety changes instead, such as grab bars or a ramp, that is a different credit. Our guide to the Home Accessibility Tax Credit for Canadian seniors explains how it works.
Does your project qualify? The 7 rules
Your project qualifies only if all seven of these are true. They come from CRA's definitions and examples for line 45355. If even one is a "no", the credit does not apply, so check them before you sign a contract.
- Age or disability. The person the suite is for is 65 or older by December 31 of the year the work finishes, or is 18 to 64 and eligible for the disability tax credit that year.
- A relative lives there too. They will live with an adult relative: a child, grandchild, parent, grandparent, brother, sister, aunt, uncle, niece or nephew, of them or of their spouse or partner.
- The home is yours or theirs. The home is in Canada and is owned by the senior or by that relative.
- It is a full, separate home. The work creates a self-contained unit with its own private entrance, kitchen, bathroom and sleeping area.
- It is new as a suite. The unit is newly built, or made from living space that did not already meet your local rules for a second unit.
- It meets local rules. The unit meets your municipality's permits, building codes and by-laws.
- Everyone moves in within a year. Your parent and the relative both live there, or expect to, within 12 months after the work is finished. And nobody has claimed this credit for this parent before.
Source: CRA, line 45355 pages, checked October 22, 2026.
The Multigenerational Home Renovation Tax Credit can be claimed for only one renovation per parent, ever, no matter who pays.
How much do you get back? A worked example
The credit is a percentage of your eligible costs, up to $50,000 in costs for each qualifying renovation. Spend $30,000 and CRA's 2025 rate returns $4,350. Spend $70,000 and only the first $50,000 counts, for $7,250. The expected 2026 rate of 14% trims each amount slightly.
| Eligible costs for the suite | Credit at 14.5% (2025, CRA's page) | Credit at 14% (2026, expected) |
|---|---|---|
| $10,000 | $1,450 | $1,400 |
| $30,000 | $4,350 | $4,200 |
| $50,000 | $7,250 | $7,000 |
| $70,000 | $7,250 (only $50,000 counts) | $7,000 (only $50,000 counts) |
Sources: CRA line 45355 pages and CRA's examples for $30,000 and $70,000; 2026 column worked out at CRA's 2026 lowest federal rate of 14%. Checked October 22, 2026.
Because the credit is refundable, a parent with a small pension who owes little tax can still get the full amount back if they paid the costs. A non-refundable credit can only cut tax you owe down to zero.
Who is eligible for the multigenerational home renovation tax credit?
Three roles matter. The senior (or adult with a disability) is the "qualifying individual". The adult relative they live with is the "qualifying relation". The person who claims must have paid the costs, lived in Canada all year, and either live in the home or, as a relative, own it.
In practice, either of you can claim, or both can share it.
- The adult child can claim if they paid for the suite and they live in the home or own it. CRA's examples show a relative who owns the house but lives elsewhere can still claim their own costs.
- The parent can claim if they paid some or all of the costs. A parent who sold their own house and put money toward the suite would claim the part they paid.
- Two of you can share it. Each person claims only what they paid, and together you cannot go over $50,000 in costs. CRA's example: two people who spent $29,000 and $33,000 could claim $29,000 and $21,000, among other splits.
A paid caregiver who is not related does not count as the relative, even if they live in. CRA uses exactly that example.
The suite can also be for you rather than your parent. Say your parent owns a bungalow and you are moving in to help. Adding a suite for yourself can qualify, because CRA's definition covers a unit for either the senior or the relative.
Under 65? An adult who is eligible for the disability tax credit can be the qualifying individual from age 18. If your parent has a care partner at home, our guide to the Canada caregiver credit covers a separate credit for supporting a family member.
What counts as an in-law suite for this credit?
CRA's word for an in-law suite is a "secondary unit": a self-contained home with its own private entrance, kitchen, bathroom and sleeping area. It can be in the basement, in an addition, or in a separate building on the same property, such as a garden suite.
Here is how common projects line up:
- A new basement suite with its own door, kitchen, bathroom and bedroom: can qualify.
- An addition built onto the house as a separate unit: can qualify.
- A garden suite or laneway house on the same lot: can qualify. CRA says the unit does not need to be part of the house if it is on the same land.
- A spare bedroom with a bathroom, but no kitchen: does not qualify. CRA's example is a sunroom converted without a kitchen.
- An existing legal basement apartment you only refresh: does not qualify, because the space already met local rules for a second unit.
Building a suite to rent to a stranger does not fit the credit, because your parent and the relative must live in the home.
What home renovations count, and which costs do not?
Costs count when they are reasonable and directly tied to building the suite. That includes contractors, materials, permits and plans. Appliances, electronics, financing costs and routine repairs do not count, and every cost needs a receipt.
Costs that count (per CRA):
- Work by professionals, such as electricians, plumbers, carpenters and architects.
- Building materials and fixtures.
- Building plans and permits.
- Equipment you rent for the job.
If you do the work yourself, your materials, fixtures, rentals, plans and permits count. Your own time and the tools you own do not.
Costs that do not count (per CRA):
- Routine or yearly repairs and maintenance.
- Household appliances, such as the suite's fridge or stove.
- Electronic home entertainment, such as a television.
- Housekeeping, security monitoring, gardening and outdoor maintenance.
- Interest and other financing costs.
- Work by a relative or anyone else you are not at arm's length with (closely tied to you), unless they are registered for GST/HST, the federal sales tax.
- Costs paid back to you, and costs without receipts.
One more adjustment: if a grant or a GST/HST rebate pays back part of a cost, subtract it before you claim.
When do you claim it, and what is the 12-month rule?
You claim once, on the tax return for the year the renovation is finished, even if the work and the bills spread over two years. Your parent and the relative must both live in the home, or expect to, within 12 months after the work is finished.
CRA says the renovation period starts with the first eligible cost, such as applying for a building permit. It ends when the work is complete, such as passing the final inspection. In CRA's example, a family whose first cost was in April 2025 and whose suite passed inspection in July 2026 claims on the 2026 return.
The 12-month rule gives you room. CRA's example has a nephew who finished a suite in 2026 and claimed on his 2026 return, while his aunt moved in during 2027.
Timing also decides the rate. A suite finished in December is claimed in that year, at that year's rate. With the rate at 14.5% for 2025 and an expected 14% for 2026, the difference on a $50,000 project is $250.
How to claim the home renovation tax credit
Claim the credit on line 45355 of your federal tax return, using Schedule 12 to list your costs and work out the amount. Keep every receipt and proof of payment, because CRA can ask for them.
- Keep the paperwork as you go. For each cost, keep the contractor or store name, business address and GST/HST number if they have one. Add what was bought or done, the dates, the work address, the invoice amount and proof you paid in full, such as a receipt, credit card slip or cancelled cheque.
- Add up the eligible costs for the suite, after subtracting any grants or rebates. The most that counts is $50,000.
- Complete Schedule 12 and enter the result on line 45355, on the return for the year the work finished.
- If you are sharing the credit, agree on who claims what before you file. Each person claims only the costs they paid.
CRA also allows more than one qualifying renovation to be claimed in the same year. Each one is worked out separately, with its own $50,000 limit.
Can you also claim the Home Accessibility Tax Credit or medical expenses?
Not for the same cost. CRA's rule is one expense, one credit. A cost you put on Schedule 12 cannot also go on your Home Accessibility Tax Credit claim (line 31285) or your medical expense tax credit claim.
The two renovation credits are built for different jobs:
| Multigenerational Home Renovation Tax Credit | Home Accessibility Tax Credit | |
|---|---|---|
| What it pays for | Creating a new self-contained secondary unit | Changes that improve access or safety, such as grab bars or ramps |
| Most costs that count | $50,000 per renovation | $20,000 a year |
| Most you can get back (2025) | $7,250 | $2,900 |
| Refundable? | Yes | No |
| How often | Once per parent, in their lifetime | Every year |
| Tax return line | 45355 (Schedule 12) | 31285 |
Source: CRA, line 45355 and line 31285 pages and CRA's 2025 webinar for adults 65 and older, checked October 22, 2026.
If your project mixes both kinds of work, talk to a tax professional about which costs belong on which credit before you file.
Check permits before you build
The suite must meet your municipality's permits, building codes and by-laws, or it does not qualify. Rules for basement suites and garden suites vary by city and town, so call your local building department before you hire anyone.
Ask three questions. Is a second unit allowed on your property? What permits and inspections does it need? And what counts as "complete" in your municipality? That last answer matters, because the year the work is complete is the year you claim. CRA gives passing the final inspection as one example of completion.
Plan the inside for the years ahead, not just moving day. Consider a step-free entrance, a walk-in shower and good lighting from the first drawings. Our aging in place checklist for Canadian homes is a useful list to hand your designer.
Living together, with your own front doors
A suite gives everyone privacy and gives you the comfort of being close. It also means your parent is behind their own door at night, when the rest of the house is asleep.
Talk about how they would reach you, or anyone, if they needed help after hours. Some families use a monitored help button for that, and our explainer on what happens when you press a medical alert button in Canada walks through who answers.
Frequently asked questions
Is there a home renovation tax credit for 2025?
Yes. For the 2025 tax year, the Multigenerational Home Renovation Tax Credit pays 14.5% of up to $50,000 for creating a secondary unit, up to $7,250. Separately, the Home Accessibility Tax Credit covers safety and access changes on up to $20,000 of costs a year. It is for people 65 and older or eligible for the disability tax credit.
Can my brother build the suite and still have it count?
Only if he is registered for GST/HST. CRA excludes goods and services from anyone you are not at arm's length with, such as a relative, unless that person is registered for GST/HST. Materials you buy from a store still count. Your own labour, or his unpaid help, does not.
Does my parent have to move in the year the suite is finished?
No. Your parent and the relative must both live there, or reasonably expect to, within 12 months after the work is finished. You still claim on the return for the year the suite was completed. CRA's own example has a relative moving in the following year.
Can we claim it again if we build a second suite later?
Not for the same parent. CRA allows only one renovation to be claimed for each qualifying individual in their lifetime, no matter who claimed it. The limit is per person, so a different family member who qualifies in their own right is not blocked by an earlier claim for your parent.
Before you sign a contract
Run your plan against the seven rules, ask your building department about permits, and start a folder for every receipt on day one.
This article is general information, not tax advice. It reflects CRA's pages as checked on October 22, 2026. The federal budget is due on November 5, 2026, and budgets can change tax credits, so confirm the current rate on canada.ca or with a tax professional before you file.
