- Run through these four questions before planning your renovation: - [ ] Is the person moving in a qualifying individual?
- The Credit at a Glance The MHRTC allows you to claim a percentage of eligible renovation expenditures, up to a set maximum, as a refundable credit on your federal income tax return.
- The renovation must create a self-contained secondary unit — a space that functions as a complete, independent living area.
Many Ontario families face the same dilemma: a parent is getting older, or a relative has a disability, and moving them into a care facility feels wrong — but their current home isn't set up to accommodate a second household. The answer more and more families are choosing is to build or convert a self-contained unit right in the family home. The Multigenerational Home Renovation Tax Credit (MHRTC) exists precisely to make that more affordable.
The MHRTC is a federal refundable tax credit, available for the 2023 tax year and onwards, designed to help families offset the cost of creating a secondary unit for a senior aged 65 or older, or for a family member who qualifies under the federal Disability Tax Credit (DTC). Unlike most renovation tax credits, it is refundable — meaning that if the credit exceeds the tax you owe, the Canada Revenue Agency (CRA) will pay you the difference as a refund.
If you are renovating your home in Ontario to bring a parent, grandparent, or disabled relative under your roof, this article explains what you need to know before you break ground.
Before You Start: A Quick Checklist
Run through these four questions before planning your renovation:
- [ ] Is the person moving in a qualifying individual? They must be 65 or older, or eligible for the federal Disability Tax Credit.
- [ ] Is the person claiming the credit a close family relative who owns or lives in the home?
- [ ] Will the new unit be genuinely self-contained? It must have its own kitchen, bathroom, and sleeping area.
- [ ] Has this qualifying individual been used for a previous MHRTC claim? Only one qualifying renovation per qualifying individual is permitted over a lifetime.
If you can check all four boxes, you are likely in a strong position to claim the MHRTC. If any answer is uncertain, read on — and consider speaking with an accountant or tax lawyer before the work begins.
What the MHRTC Covers
The Credit at a Glance
The MHRTC allows you to claim a percentage of eligible renovation expenditures, up to a set maximum, as a refundable credit on your federal income tax return. As of writing, the eligible expenditure cap and credit rate are set out in the federal Income Tax Act — verify the current amounts with the CRA or a qualified accountant before filing, as these figures can change.
The credit applies to work done on a qualifying renovation — essentially, the construction or conversion of a self-contained secondary unit within an existing dwelling. It is available to the eligible person (the family member who owns or ordinarily inhabits the home) in respect of a qualifying individual (the senior or person with a disability who will live in the unit).
The Two People Who Matter
The qualifying individual is the person the unit is being built for. They must, at the time of the renovation:
- Be 65 years of age or older, or
- Be eligible to claim the federal Disability Tax Credit (DTC)
They must also be related by blood, marriage, adoption, or common-law partnership to the eligible person.
The eligible person is the one who claims the credit on their tax return. They must own (or ordinarily inhabit) the qualifying dwelling and be related to the qualifying individual. The eligible person does not need to live in the dwelling themselves, provided they have a qualifying ownership interest and the qualifying individual occupies the secondary unit.
The Self-Contained Secondary Unit Requirement
This is the heart of the MHRTC. The renovation must create a self-contained secondary unit — a space that functions as a complete, independent living area. To meet this test, the unit must include:
- A kitchen (cooking area with sink and appliances or plumbing for them)
- A bathroom
- A sleeping area
A completely separate exterior entrance is not strictly required under the federal rules, though it is often advisable from a practical standpoint and may be required under Ontario's Planning Act or local zoning bylaws. The key is that the unit must be distinct from the main living area — not simply a bedroom with a mini-fridge.
The unit must be within an eligible dwelling, which is an existing residential property that the qualifying individual and eligible person ordinarily inhabit (or will inhabit).
What You Can and Cannot Claim
Eligible Expenditures
- Construction, renovation, or alteration of the secondary unit
- Labour costs (paid to arm's-length contractors)
- Building materials
- Permit fees
- Costs directly related to creating the qualifying unit
Non-Eligible Expenditures
- Appliances (stoves, fridges, dishwashers)
- Cosmetic or purely aesthetic items that do not contribute to creating the unit (painting a room that already exists, for example)
- Routine maintenance and repairs
- Work done on parts of the home that are not being converted into the secondary unit
- Costs reimbursed by insurance or any other government program
If an expense is already being claimed under the Home Accessibility Tax Credit (HATC) for the same project, it cannot also be claimed under the MHRTC. The two credits cannot be stacked on the same dollar of expense.
One Lifetime Limit Per Qualifying Individual
There is an important restriction: only one qualifying renovation is permitted per qualifying individual over their lifetime. Once a claim has been made in respect of a particular senior or person with a disability, no further MHRTC claims can be made for that same individual, even for a different home or a different family member.
How the MHRTC Differs from the HATC
Many families encounter both the MHRTC and the Home Accessibility Tax Credit (HATC) when planning a renovation for an aging or disabled family member. They serve different purposes and work differently:
| MHRTC | HATC | |
|---|---|---|
| Purpose | Create a new self-contained secondary unit | Make an existing home more accessible |
| Refundable? | Yes | No |
| Who benefits | Families building an in-law suite | Seniors and persons with disabilities improving their own space |
| Scope of eligible work | Unit construction/conversion | Accessibility modifications (grab bars, ramps, wider doorways) |
Crucially, both credits can apply to the same renovation project — but each dollar of expense can only be claimed under one credit, not both. If you are installing a walk-in shower in the new secondary unit, that cost might qualify under the HATC (as an accessibility modification) or the MHRTC (as part of unit construction), but not both simultaneously.
Interaction with the Medical Expense Tax Credit
Some renovation costs that are prescribed for medical purposes may also qualify for the Medical Expense Tax Credit (METC). Again, the same expense cannot be claimed under more than one credit. A tax professional can help you allocate costs across credits to maximize your overall benefit.
Permits, Documentation, and Record-Keeping
The CRA may request documentation to support your claim. Keep the following for at least six years after filing:
- All receipts, invoices, and contracts for eligible work
- Building permits and municipal approvals
- Evidence that the qualifying individual is 65+ or holds a valid DTC certificate
- Documentation establishing your relationship to the qualifying individual
- Proof of your ownership interest in the property
Skipping permits is particularly risky: a renovation done without the required municipal building permit may not qualify as an eligible expenditure, and you could face orders to remove or restore the work.
When to Consult a Lawyer
The MHRTC is a tax matter — but creating a secondary unit often touches on legal issues that go beyond filing a return:
- Zoning and land use: Ontario municipalities have their own rules about secondary suites, garden suites, and accessory dwelling units. Some areas require a Committee of Adjustment application if the property is not already zoned to permit a secondary unit.
- Ownership structure: If the qualifying individual's name is being added to title — or if the home is being transferred to facilitate the renovation — there are real estate law and estate planning implications.
- Landlord-tenant law: If the qualifying individual will eventually vacate and the unit will be rented, Ontario's Residential Tenancies Act will apply.
Getting the legal pieces right before construction protects your investment and your relationship with your municipality.
Frequently asked questions
Can both my spouse and I claim the MHRTC for the same renovation?
The total eligible expenditures that can be split between multiple claimants is capped at the maximum set by the CRA for a single qualifying renovation. You can divide the claim between eligible family members, but the combined claim cannot exceed the cap. Verify the current rules with the CRA or an accountant before splitting the claim.
What if the qualifying individual is both 65+ and holds a DTC certificate — do we get a larger credit?
No. The qualifying individual meets the eligibility test under either condition. Meeting both does not increase the credit or the expenditure cap. The lifetime limit of one qualifying renovation per qualifying individual still applies.
The secondary unit already existed in my home — can I claim the MHRTC to renovate it?
The MHRTC requires a qualifying renovation — which means work that creates a new self-contained secondary unit where one did not previously exist, or that converts an existing space (such as a basement) into one. Simply upgrading or refreshing an existing secondary unit that already met the self-contained test before the renovation likely does not qualify. The unit must be newly created or newly made self-contained by the work being done.
We are building a detached garden suite in the backyard — does that qualify?
The MHRTC applies to secondary units created within an eligible dwelling (the existing home). A fully detached structure may not meet the "within" requirement, depending on how the CRA interprets the provision in your specific situation. This is exactly the kind of question to put to a tax professional before construction begins.
This is a tax question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.