Multigenerational Home Renovation Tax Credit (“MHRTC”)
Budget 2022 proposes to introduce the MHRTC, which is a refundable tax credit that applies to individuals who incur eligible expenses in renovating their home to create a second dwelling unit for an eligible senior who is a “qualifying relation”. The credit is computed as 15 per cent of the eligible expenses, to a maximum of $50,000, for a maximum refundable credit of $7,500. The MHRTC will apply to eligible expenses incurred on or after January 1, 2023 to create a secondary dwelling.
Eligible Persons
Eligible persons for the purposes of the MHRTC are:
- Seniors who are 65 years of age or older at the end of the taxation year that includes the end of the renovation period.
- Adults with disabilities who are 18 years of age or older at the end of the taxation year that includes the end of the renovation period, and who are eligible for the Disability Tax Credit at any time in that year.
Qualifying Relations
A qualifying relation in respect of an eligible person who claims the MHRTC would be an individual who is 18 years of age or older at the end of the taxation year that includes the end of the renovation period and is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, or nephew of the eligible person.
Who can claim the MHRTC?
- An individual who ordinarily resides, or intends to ordinarily reside, in the eligible dwelling within twelve months after the end of the renovation period and who is:
- An eligible person;
- The spouse or common-law partner of the eligible person;
- A qualifying relation, in respect of an eligible person; or
- A qualifying relation, in respect of an eligible person, who owns the eligible dwelling.
- More than one individual can claim the MHRTC as long as no more than 15 per cent of the maximum $50,000 expenditure limit is claimed between them.
Eligible Dwelling
An eligible dwelling would be defined as a housing unit that is:
- Owned (either jointly or otherwise) by the eligible person, the spouse or common-law partner of the eligible person or a qualifying relation in respect of the eligible person; and
- Where the eligible person and a qualifying relation in respect of the eligible person ordinarily reside, or intend to ordinarily reside, within 12 months after the end of the renovation period.
An eligible dwelling would include the land subjacent to the housing unit and the immediately contiguous land but would not the portion of that land that exceeds the greater of ½ hectare and the portion of that land that the individual establishes is necessary for the use and enjoyment of the housing unit as a residence.
Qualifying Renovation
A qualifying renovation would be defined as a renovation or alteration of, or addition to, an eligible dwelling that is:
- Of an enduring nature and integral to the eligible dwelling; and
- Undertaken to enable an eligible person to reside in the dwelling with a qualifying relation, by establishing a secondary unit within the dwelling for occupancy by the eligible person or the qualifying relation.
A secondary unit would be defined as a self-contained dwelling unit with a private entrance, kitchen, bathroom facilities, and sleeping area. The secondary unit could be newly constructed or created from an existing living space that did not already meet the requirements to be a secondary unit. To be eligible, relevant building permits for establishing a secondary unit must be obtained and renovations must be completed in accordance with the laws of the jurisdiction in which an eligible dwelling is located.
One qualifying renovation would be permitted to be claimed in respect of an eligible person over their lifetime.
Renovation Period
The renovation period means a period that:
- Begins at the time that an application for a building permit for a qualifying renovation is submitted; and
- Ends at the time when the qualifying renovation passes a final inspection, or proof of completion of the project according to all legal requirements of the jurisdiction in which the renovation was undertaken is otherwise obtained.
The MHRTC would be available for the taxation year that includes the end of the renovation period.
Eligible Expenses
Eligible expenses would include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits. Items such as furniture, appliances and regular repairs and maintenance are not integral to the creation of the dwelling and therefore, not eligible. Receipts for the eligible expenses must be retained.
Eligible expenses must be reduced by any reimbursement or any other form of assistance that an individual is or was entitled to receive, including any related rebates. Furthermore, expenses would not be eligible for the MHRTC if they are claimed under the Medical Expense Tax Credit and/or Home Accessibility Tax Credit.