Multigenerational Home Renovation Tax Credit (MHRTC): 2025 Claim Guide

The Multigenerational Home Renovation Tax Credit (MHRTC) is one of the most generous federal credits introduced in the past decade — and one of the most overlooked. It pays a refundable credit — at the federal “appropriate percentage” for the year, 14.5% for a renovation completed in 2025 (14% for 2026) — on up to $50,000 of eligible renovation expenses incurred to create a self-contained secondary suite for a senior parent or a disabled adult family member. That’s up to $7,250 back for a 2025 completion ($7,000 for 2026), even if your tax owing is zero.

It first applied to the 2023 taxation year and continues without expiry. Many families undertaking renovations to keep aging parents at home — or to bring in an adult child with a disability — have never heard of it, leaving thousands on the table.

This guide explains exactly who qualifies, what counts as a “secondary unit”, what expenses are eligible, and the trade-offs between MHRTC, the Home Accessibility Tax Credit (HATC), and the Medical Expense Tax Credit when the same renovation could fit multiple credits.

1. What the MHRTC Is

Statutory home: Income Tax Act s.122.92. Claim mechanism: Schedule 12 — Multigenerational Home Renovation Tax Credit, attached to your T1.

The mechanics are simple:

• The federal “appropriate percentage” for the year (the same rate that sets the lowest federal tax bracket) — 14.5% for 2025, 14% for 2026 — of qualifying renovation expenses, capped at $50,000 of expenses. The rate is not fixed in the statute; it tracks the lowest federal bracket rate, which was cut from 15% to 14% effective July 1, 2025 — a mid-year change that blends to an effective 14.5% for the full 2025 tax year — and drops to a flat 14% for 2026.
• Maximum credit per qualifying renovation = 14.5% × $50,000 = $7,250 for 2025 (14% × $50,000 = $7,000 for 2026).
• Refundable — if your total tax owing is below the credit amount, CRA pays out the difference as a refund. This is what makes it dramatically more valuable than a non-refundable credit for low-income families.
• Claimed in the taxation year the renovation is completed, not the year(s) expenses are incurred. So a renovation that runs from October 2024 to March 2025 is claimed on the 2025 T1.

A “qualifying renovation” must create a secondary unit within (or attached to) an “eligible dwelling” in Canada — your principal residence, or a residence reasonably expected to become a principal residence within 12 months of completion.

2. Who Qualifies — The Three Parties

The MHRTC requires three roles, which can overlap:

1. The qualifying individual — the person the suite is being built for. Must be either:

   • A senior: 65 or older at the end of the renovation’s completion year, or
   • An adult with a disability: at least 18 and eligible for the Disability Tax Credit (DTC) at any point during the renovation’s completion year. (See the Disability Tax Credit explainer for DTC eligibility.)

2. The qualifying relation — the family member who lives or will live with the qualifying individual. The relationship must be one of: parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew — of the qualifying individual or the qualifying individual’s spouse/common-law partner. Cousins do not count. In-laws of the qualifying individual’s spouse do count.

3. The eligible individual — who actually claims the credit on Schedule 12 (the statute’s term for the claimant, s.122.92(3)). This is anyone who ordinarily resides, or intends to ordinarily reside, in the dwelling within 12 months of the renovation’s completion, and is one of: the qualifying individual, the qualifying individual’s spouse/CLP, or a qualifying relation of the qualifying individual (or their spouse/CLP). Only one credit per qualifying renovation, ever, but it can be split across multiple eligible individuals if they all paid eligible expenses.

The qualifying individual and qualifying relation must ordinarily live, or intend to live, in the dwelling within 12 months of the renovation’s completion — that residency test is what makes someone an “eligible individual” able to claim. This is the multigenerational part — the credit is for cohabitation, not for renovating a separate property to rent to your parent.

3. What Counts as a “Secondary Unit”

This is the most-litigated part of the credit. A secondary unit must be:

• Self-contained with all four of the following: a private entrance, a kitchen, a bathroom, and a sleeping area.
• Located in, or attached to, the eligible dwelling. A detached garden suite (“granny flat”) on the same lot does qualify provided the lot remains the principal residence’s property. A separate-address rental house does not.
• Built either by new construction (an addition, basement conversion, attic conversion, garage conversion) or by conversion of existing space (e.g. converting an existing den + powder room into a self-contained suite by adding a kitchen).

What does not qualify, even when meant to help an aging or disabled relative:

• A bathroom modification (walk-in tub, grab bars, widened doors).
• A wheelchair ramp.
• A stair lift or chair lift.
• Repainting, replacing flooring, or repairing the rest of the house.
• A guest room renovation that doesn’t include a kitchen.

These accessibility renovations are eligible under the Home Accessibility Tax Credit (HATC) — federal s.118.041 — which pays the same federal “appropriate percentage” as MHRTC (14.5% for 2025, 14% for 2026) on up to $20,000 of accessibility expenses ($2,900 max credit for 2025, $2,800 for 2026). See § 6 below for which credit to choose when a renovation could fit either.

4. Eligible Expenses

You can claim costs that are directly attributable to the qualifying renovation. CRA’s interpretation aligns with the legislation:

Eligible:

• Building permits, inspection fees, design and architectural fees.
• Materials — drywall, lumber, plumbing fixtures, electrical fixtures, doors, windows, insulation, flooring.
• Labour and professional services — contractor, plumber, electrician, framer, drywaller.
• Equipment rentals used in the renovation.
• Built-in appliances and fixtures permanently affixed to the unit (a built-in stove, range hood, dishwasher, water heater installed for the suite).

Not eligible:

• Furniture, freestanding appliances (refrigerator, microwave, washer/dryer not built-in).
• Tools the claimant keeps after the job.
• Maintenance, ongoing utilities, security or housekeeping services.
• Costs for which someone else has already claimed (no double-dipping with HATC, METC, or a provincial home-renovation credit on the same dollar of expense).
• Labour by a person related to the claimant unless that person is registered for GST/HST and is in the business of providing those services. (Your contractor brother-in-law can do the work, but he must be GST/HST-registered and invoicing you at arm’s length rates.)

Keep every receipt, invoice, and permit. CRA’s verification rate on Schedule 12 claims has been higher than average since 2023, given how new the credit is.

5. Lifetime Cap and Allocation

• One qualifying renovation per qualifying individual, lifetime. If you renovate again for the same parent in 2030, that second renovation does not qualify — the credit is exhausted.
• Each qualifying individual is a separate cap. If you build a suite for your mother in 2025 and a second suite (or modification) for your father in 2028, each renovation has its own $50,000 ceiling, because the qualifying individuals differ.
• Multiple claimants on the same renovation must allocate the credit. If you and your sibling each paid for half a $48,000 renovation completed in 2025, you can split the $6,960 credit ($48,000 × 14.5%) as you mutually agree, as long as the total claimed across all claimants doesn’t exceed $6,960.

6. Worked Example

The Tan family converts their basement into a one-bedroom self-contained suite for Mrs. Tan’s 72-year-old father.

Costs incurred in 2025:

• Building permit: $1,200
• Architect’s drawings: $3,500
• Framing + drywall + insulation: $14,000
• Plumbing (kitchenette sink, bathroom plumbing rough-in, hot water tank): $8,500
• Electrical (separate panel sub-feed, outlets, lighting): $6,000
• Built-in stove and range hood: $2,800
• Flooring, doors, painting: $7,000
• New separate entrance (excavation + exterior door): $5,000

Total spent: $48,000. All directly attributable.

Mrs. Tan’s father moves in in November 2025. The renovation is complete in November 2025. Mrs. Tan claims on her 2025 T1:

• Schedule 12 qualifying expenses: $48,000 (under the $50,000 cap).
• Credit: 14.5% × $48,000 = $6,960 refundable (the 2025 rate, since the renovation is completed in 2025).

Mrs. Tan’s marginal tax bracket is 33%. Her tax owing in 2025 before any credits is $14,200. After the MHRTC, her balance becomes $14,200 − $6,960 = $7,240. Had her tax owing been only $4,000, CRA would have refunded the remaining $2,960 — that’s the refundable mechanic.

If Mrs. Tan and her sister had jointly paid (Mrs. Tan $30,000, sister $18,000), they could agree to split the $6,960 credit any way, e.g., Mrs. Tan $4,350 / sister $2,610, as long as the total = $6,960.

7. Decision Framework — MHRTC vs HATC vs Medical Expense Credit

When a renovation could plausibly fit multiple credits, you can claim different expenses under different credits — but never the same expense twice. Here’s how to choose:

Stacking rule (CRA interpretation 2023-0973261R3): if a single renovation produces both a self-contained suite (MHRTC-eligible) and standalone accessibility modifications (HATC-eligible) — say, your basement-suite buildout also includes a $4,000 wheelchair ramp on the new exterior entrance — you can claim the ramp’s $4,000 under HATC and the remaining $44,000 under MHRTC. Allocate each invoice to one credit only.

Rule of thumb decisions:

• If you’re building a new suite → MHRTC every time. It’s bigger and refundable.
• If you’re modifying an existing home (no new unit) → HATC for accessibility, and consider METC for any expense your doctor prescribes that has a medical purpose.
• If your relative is DTC-eligible and lives with you full-time → use the Canada Caregiver Credit alongside any of the above on your annual T1. That’s a separate non-refundable credit (~$2,499 in 2025) and not tied to renovations.

A relevant calculator: the Medical Expense Tax Credit Calculator can help you check whether your METC expenses clear the 3%-of-net-income floor before you commit them to that credit (instead of MHRTC or HATC). For MHRTC itself, the calculation is straightforward: take the appropriate percentage for the year (14.5% for a 2025 completion, 14% for 2026) of your eligible expenses up to the $50,000 cap.

8. How to Claim — Step by Step

1. Confirm eligibility before you start the renovation. Document the qualifying individual’s age (or DTC certificate), the qualifying relation, and the intent that they will live in the unit.
2. Get a building permit. This is required for most secondary-suite renovations under provincial building codes, and the permit itself is an eligible expense. Without a permit, expenses may still be eligible, but CRA can challenge whether the build was lawful.
3. Keep every receipt, invoice, and proof of payment. CRA wants invoices in the claimant’s name. Pay by cheque, debit, or credit card — not cash — for an audit trail.
4. Complete Schedule 12 with your 2025 T1. Total your eligible expenses, enter on Line 1, multiply by the appropriate percentage for the year (14.5% for 2025), enter the credit amount on line 45355 of your T1 return.
5. If splitting with another family member, both claimants attach Schedule 12 with the same renovation identifier and matching allocation. The total across all Schedule 12s for the same renovation cannot exceed 14.5% × $50,000 (2025) / 14% × $50,000 (2026).
6. Retain documentation for 6 years from the end of the tax year claimed. CRA can request supporting documents at any point during that window.

Related Reading

• CRA Medical Expense Credit — when prescribed home modifications can stack with METC.
• Disability Tax Credit (DTC) Eligibility — qualifying the qualifying individual under the disability prong.
• Medical Expense Tax Credit Calculator — computes METC on prescribed renovation costs to compare with MHRTC.

FAQs

Q: Can I claim MHRTC if my parent already owns the home and the renovation happens at their house, not mine?

A: Yes, provided the qualifying relation (you) ordinarily lives — or will ordinarily live — in the home within 12 months of the renovation’s completion. The credit is about cohabitation, not which name is on the title. The claimant can be the homeowner, the qualifying relation, or both, splitting the credit. If the qualifying relation never moves in, the credit can be denied even if all other tests pass.

Q: My mother is 64 but is on a long-term medical leave and qualifies for the DTC. Can I claim MHRTC?

A: Yes. The “qualifying individual” prong has two alternative tests — either 65+ at year-end or DTC-eligible at any point during the year. DTC eligibility alone is sufficient, regardless of age (as long as she is at least 18). The DTC certificate (Form T2201) must be on file with CRA.

Q: I finished the renovation in November 2024. Can I claim on my 2025 return because that’s when my parent actually moved in?

A: No. The credit is claimed in the renovation completion year, not the move-in year. If it completed in 2024, it goes on your 2024 T1. If you missed it, you can file a T1 adjustment (Form T1-ADJ) within 10 years of the original return to add Schedule 12 retroactively. The 10-year window matters here — many families discover the MHRTC well after completion and assume it’s too late. It usually isn’t.