Multigenerational Home Renovation Tax Credit (MHRTC) in 2026: What Families Must Know

Canada’s population is aging.

Housing costs are rising.
Families are consolidating households.
Adult children are caring for aging parents.

In response, Parliament introduced the Multigenerational Home Renovation Tax Credit (MHRTC).

The credit is governed by Income Tax Act (ITA) s.118.041 and claimed on CRA Line 45355 of your personal tax return.

For families with family-owned enterprises — especially those focused on legacy and intergenerational planning — this credit can be meaningful.

But it is technical.

Let’s examine it properly.

 

What Is the Multigenerational Home Renovation Tax Credit?

The MHRTC is:

• A refundable tax credit
• Equal to 15% of eligible renovation expenses
• On up to $50,000 of qualifying expenditures
• Maximum credit: $7,500

Refundable means:

Even if you owe no tax, you may receive a payment.

But only if all statutory conditions are satisfied.

 

What Is the Purpose?

The credit supports renovations that:

Create a secondary dwelling unit within an existing home
So that a qualifying individual can live with a related person.

It is not for cosmetic upgrades.

It is for structural modification to allow co-residence.

 

Who Is a “Qualifying Individual”?

Under ITA s.118.041, a qualifying individual is:

• A senior (generally age 65 or older at the end of the year), OR
• An adult eligible for the Disability Tax Credit

The renovation must allow that individual to live with:

• A qualifying relation (such as a child, grandchild, parent, or sibling)

Family relationship is essential.

 

What Is a “Qualifying Renovation”?

A qualifying renovation must:

• Create a self-contained secondary dwelling unit
• Include a private entrance
• Include kitchen and bathroom facilities
• Comply with local building codes
• Be intended for long-term occupancy

Temporary accommodations do not qualify.

The renovation must create a legally compliant, separate living space.

 

Maximum Eligible Expenses

Eligible expenses are capped at:

$50,000 per qualifying renovation.

The credit equals:

15% × eligible expenses.

Maximum credit: $7,500.

If renovation costs $80,000:

Only $50,000 qualifies.

Credit limited to $7,500.

 

Eligible Expenses Include

Generally:

• Construction labour
• Building materials
• Architectural design
• Permits
• Plumbing and electrical work
• Renovation directly related to creating the secondary unit

Expenses must be reasonable and supported by receipts.

 

What Does Not Qualify?

Excluded expenses typically include:

• Furniture
• Appliances
• Routine repairs
• Landscaping
• Financing costs
• Maintenance

The renovation must relate directly to creating the qualifying dwelling unit.

 

One Claim Per Renovation

Only one qualifying renovation may be claimed per eligible individual.

However:

Multiple qualifying individuals in the same home may potentially allow separate claims — subject to statutory limits.

This requires careful analysis.

 

Ownership Is Not Always Required

You do not necessarily have to own the home.

You must be:

• An eligible individual
• Or a qualifying relation

The claim must be coordinated among family members.

Only one claim can be made per renovation.

 

Documentation Requirements

CRA expects:

• Detailed invoices
• Contractor information
• Proof of payment
• Building permits
• Evidence of compliance with local laws

Improper documentation may result in denial.

 

Example Scenario

Adult daughter renovates her home to create a secondary suite for her 72-year-old mother.

Renovation costs: $48,000.

All statutory conditions met.

Credit = 15% × $48,000 = $7,200 refundable credit.

Even if daughter owes little tax, the credit is refundable.

 

Interaction With Estate and Succession Planning

For family-owned enterprises:

Housing decisions often intersect with:

• Estate planning
• Long-term care considerations
• Succession housing transitions
• Wealth preservation

Renovating a principal residence may also interact with:

• Principal Residence Exemption planning
• Ownership structuring
• Trust considerations

The tax credit is one piece of a larger intergenerational strategy.

 

Common Misunderstandings

“Any renovation for my parents qualifies.”
No. It must create a self-contained dwelling unit.

“Appliances count.”
Generally no.

“Multiple siblings can each claim $7,500.”
Only one claim per renovation.

“It’s non-refundable.”
It is refundable.

 

Strategic Considerations for 2026

Before commencing renovation:

• Confirm the individual qualifies (age or DTC status)
• Confirm family relationship
• Confirm structural compliance requirements
• Retain all documentation
• Coordinate who will claim the credit

For families focused on generational continuity, this credit supports housing stability — but only when structured properly.

 

Final Thoughts

Under ITA s.118.041, the Multigenerational Home Renovation Tax Credit provides up to $7,500 in refundable tax relief for qualifying renovations.

Claimed on Line 45355, it supports co-residence between seniors or disabled adults and family members.

But it is not automatic.

It is statutory.

For disciplined families building legacy and stability, tax planning must extend beyond business — into home, care, and intergenerational structure.

At Shajani CPA, we integrate personal tax, family strategy, and long-term planning with clarity and precision.

Because wealth preservation includes where — and how — we live.

Tell us your ambitions, and we will guide you there.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2026 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.