Multigenerational Home Renovation Tax Credit (MHRTC) Canada 2026 — $7,500 Credit

Quick Answer

The Multigenerational Home Renovation Tax Credit Canada 2026 in one paragraph: the MHRTC is a refundable federal tax credit equal to 15% of the lesser of (a) eligible qualifying renovation expenditures paid in the year and (b) $50,000 — producing a maximum credit of $7,500 per qualifying renovation. The credit was introduced in Budget 2022 and took effect on January 1, 2023; it remains in force for the 2026 tax year with no announced changes. A “qualifying renovation” is a renovation, alteration, or addition to an eligible dwelling that (i) enables an eligible person (a senior age 65 or older by the end of the tax year, or any person eligible for the Disability Tax Credit) to live with a qualifying relation, and (ii) creates a secondary unit — a self-contained dwelling area with its own private entrance, kitchen, bathroom facilities, and sleeping area. The credit is refundable, meaning eligible families with low or zero tax payable still receive the credit as a cash refund. It is claimed on Schedule 12 of the T1 return for the year the renovation is “completed” (the date the work is substantially finished and habitable). Eligible expenditures include the cost of materials, labour, professional fees (architect, designer, contractor), building permits, equipment rental, and fixtures permanently attached to the dwelling. Ineligible expenditures include household appliances (refrigerator, stove, dishwasher), audio-visual equipment, security monitoring services, financing costs (mortgage interest, line-of-credit interest), housekeeping or gardening services, recreational items (hot tubs, pools), routine maintenance, and the value of the family’s own labour. The credit can be split among multiple eligible claimants who incurred the cost (typically the senior or DTC-eligible person and a qualifying relation), but the combined claim cannot exceed $7,500 per qualifying renovation per lifetime. The supporting documentation file — receipts, supplier names, GST/HST numbers, evidence of secondary-unit completeness — should be assembled before filing and held for six years per the standard CRA record-retention requirement.

What counts as a qualifying renovation

The MHRTC applies to a “qualifying renovation,” which must satisfy two cumulative tests under subsection 122.92(1) of the Income Tax Act:

The enabling-cohabitation test. The renovation must be undertaken to enable an eligible person to live with a qualifying relation in the eligible dwelling within 12 months after the renovation is completed (or, where the eligible person already lived in the dwelling at the start of the renovation, to continue living there in a manner that the renovation reasonably supports).

The secondary-unit creation test. The renovation must create a “secondary unit” — defined as a self-contained dwelling area with all of:

• A private entrance (from outside or from a common area shared with the main unit);
• A kitchen (or at least cooking facilities — refrigerator, sink, cooking surface);
• Bathroom facilities (toilet, sink, bathing facility);
• A sleeping area.

A renovation that adds a single bedroom or accessibility-only feature to an existing dwelling without creating the four self-contained components does NOT qualify. The most common qualifying renovations:

• Building a basement apartment with private entrance, kitchenette, bathroom, and bedroom.
• Building a self-contained granny suite over a detached garage.
• Constructing a fully accessible main-floor in-law suite as a new addition to the main home.
• Converting an attached garage into a self-contained accessibility unit.

The renovation can be of an existing portion of the dwelling (e.g., finishing a basement that previously contained only storage and laundry) or an addition (e.g., new construction extending the home’s footprint).

Who is an eligible person and a qualifying relation

The eligibility tests are strict and carry through to documentation requirements.

Eligible person — must be either:

• An individual age 65 or older by the end of the tax year the renovation is completed, or
• An individual of any age who is eligible for the Disability Tax Credit (DTC) in the tax year — meaning the individual has a valid Form T2201 on file with CRA, or applies for and is approved for DTC eligibility before claiming the MHRTC.

Qualifying relation — must be a person who is, in relation to the eligible person:

• The eligible person’s parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew (including in-laws of these — so the spouse’s parent qualifies if the renovation enables the parent-in-law to live with the family), or
• The spouse or common-law partner of any of the above.

A friend, neighbour, or unrelated caregiver is NOT a qualifying relation.

The eligible person and the qualifying relation must “ordinarily inhabit, or intend to ordinarily inhabit, the eligible dwelling” within 12 months after the qualifying renovation is completed. CRA’s administrative interpretation of “ordinarily inhabit” is principal-residence-style — the dwelling is the regular living arrangement, not a vacation cottage or part-time use.

Eligible vs ineligible expenditures

The expense file is the most common audit area for the MHRTC. Schedule 12 requires the claimant to list eligible expenditures by category, and CRA’s standard review approach is to request a sample of invoices for verification.

Eligible expenditures include:

• Materials acquired for the qualifying renovation (lumber, drywall, plumbing fixtures, electrical fixtures, flooring, paint, hardware, insulation).
• Labour and professional services (general contractor, electrician, plumber, drywaller, painter, framer, architect, designer, engineer, building permits coordinator).
• Building permits, inspection fees, and similar government-imposed charges directly attributable to the renovation.
• Equipment rentals (scaffolding, tools, dumpsters, portable washrooms used during construction).
• Fixtures permanently attached to the dwelling (sinks, toilets, bathtubs, vanity cabinets, kitchen cabinets, kitchen counters, ceiling fans, light fixtures, smoke detectors, hard-wired alarm components).
• Cost of acquiring or renting equipment that will be permanently installed (HVAC units, water heaters, on-demand water heaters).
• Goods and Services Tax / Harmonized Sales Tax payable on eligible expenditures (the GST/HST is included in the eligible amount, not netted out).

Ineligible expenditures include:

• Household appliances — refrigerator, stove, dishwasher, washing machine, dryer, microwave (even if built-in or permanently installed).
• Audio-visual equipment — televisions, sound systems, smart speakers.
• Security monitoring services, alarm system monitoring subscriptions, intercom subscriptions.
• Financing costs — mortgage interest, line-of-credit interest, loan origination fees, mortgage insurance premiums.
• Routine maintenance and repair (replacing a worn-out roof, repainting an existing room without altering its use, replacing failed plumbing fixtures with same-style replacements).
• Services for cleaning, security monitoring, lawn-care, gardening, snow removal, and similar ongoing services.
• Recreational items — hot tubs, swimming pools, saunas, gazebos, garden ornaments, outdoor kitchens used for entertainment.
• Furniture and furnishings (sofas, beds, dining tables, window blinds).
• The value of the claimant’s own labour or that of a qualifying relation — even if the labour was substantial and saved cost.
• Goods and services acquired for personal use beyond the renovation scope (e.g., a household kitchen upgrade for the main unit during the project).

The grey-area items that often trigger CRA review questions:

• Window coverings: blinds and curtains are generally ineligible (furnishings), but custom-built window coverings that are permanent fixtures (e.g., built-in plantation shutters) may qualify.
• Smart-home equipment: hard-wired light fixtures qualify; smart-bulb retrofit kits or stand-alone hub devices typically do not.
• Outdoor work directly enabling accessibility to the secondary unit (a ramp, an accessible door, a paved path from driveway to secondary entrance) qualifies; broader landscaping does not.
• Energy-efficiency upgrades to the main dwelling that are not in or directly serving the secondary unit are ineligible.

How to claim — Schedule 12 mechanics

The MHRTC is claimed on Schedule 12 (Multigenerational Home Renovation Tax Credit) of the T1 General return for the tax year in which the qualifying renovation is “completed” — typically the year the unit is first habitable and the building inspection sign-off is received.

The Schedule 12 fields:

• Name and SIN of the eligible person.
• Address of the eligible dwelling.
• Date the qualifying renovation began.
• Date the qualifying renovation was completed.
• Total eligible expenditures (line 41020).
• The lesser of total eligible expenditures and $50,000 (the qualifying expenditure ceiling).
• 15% of the lesser amount — this is the MHRTC.

The credit appears on the T1 General refundable credits line, increasing the refund or reducing the balance owing.

Where multiple claimants incurred portions of the renovation cost (e.g., the senior parent and an adult child each contributed funds), they may split the claim — each claiming a portion of the eligible expenditures and the corresponding 15% credit. The aggregate claim across all claimants for a single qualifying renovation cannot exceed $7,500 lifetime (i.e., 15% × $50,000).

The Schedule 12 should be filed in the year of completion. Where the renovation spans multiple tax years (e.g., started late 2024, completed mid-2026), all eligible expenditures across the multi-year project are claimed on Schedule 12 in the year of completion — not pro-rated across years.

Documentation file

The single most important defensive document is the receipt file. The CRA review standard for MHRTC claims requires the claimant to produce, on request:

For each eligible expenditure category:

• Original invoice or receipt from the supplier.
• Supplier name, address, and GST/HST number.
• Description of goods or services sufficient to identify them as eligible.
• Date of supply or installation.
• Amount before GST/HST and amount of GST/HST separately.
• Method of payment (cancelled cheque, credit card statement, e-transfer record).

For the qualifying-renovation tests:

• Building permit application and approval.
• Architectural or designer drawings showing the secondary-unit layout.
• Final building inspection sign-off.
• Photos of the secondary unit on completion showing the private entrance, kitchen, bathroom, and sleeping area.

For the eligible-person and qualifying-relation tests:

• Evidence of the eligible person’s age (driver’s licence, passport) for the 65+ test, OR the Disability Tax Credit approval letter (T2201 acceptance) for the DTC-eligible test.
• Family-tree or relationship documentation linking the eligible person to the qualifying-relation claimant (typically obvious from family registry but should be documented).

For the cohabitation intent:

• Lease or occupancy agreement showing the eligible person’s move-in date (or planned move-in date) within 12 months of completion.
• Updated provincial-health-card address change.
• Driver’s licence address update.

The file should be retained for six years per the standard CRA record-retention rules, regardless of whether CRA reviews the claim.

Frequently asked questions

Can I claim the MHRTC if my parent already lives with us but we’re renovating to give them more space? Yes, provided the renovation creates a new self-contained secondary unit (private entrance, kitchen, bathroom, sleeping area) and the parent is age 65+ or DTC-eligible. A renovation that simply expands an existing shared-space arrangement (without creating a self-contained secondary unit) does not qualify. The parent’s continued cohabitation in the new secondary unit satisfies the enabling-cohabitation test.

Can I claim the credit before the renovation is complete? No. The credit is claimed in the year of completion. Expenditures paid in earlier years on a multi-year project are included on the Schedule 12 in the completion year, but the claim cannot be made until completion.

Does the secondary unit need a separate civic address or property tax assessment? No. The MHRTC does not require a separate civic address or a separate property tax assessment. The four-component test (private entrance, kitchen, bathroom, sleeping area) is self-contained within the existing eligible dwelling. Many qualifying secondary units share a civic address with the main dwelling.

Can I claim both the MHRTC and the Home Accessibility Tax Credit (HATC) on the same renovation? Yes. The MHRTC and HATC can both apply to the same renovation, but the same expenditure cannot be claimed under both credits — there is no double-counting. The two credits can shelter different portions of the total cost. The HATC is also a 15% credit on up to $20,000 of eligible accessibility expenditures (maximum $3,000 credit). Together, MHRTC + HATC can deliver up to $10,500 of combined credit on a sufficiently large renovation.

Can I claim the MHRTC for a renovation on a rental property? The MHRTC applies to an “eligible dwelling” — defined as a dwelling that the eligible person and the qualifying relation ordinarily inhabit (or intend to ordinarily inhabit) within 12 months after completion. A rental property held purely as an investment, with no intent for the eligible person and qualifying relation to live there, does not qualify. A rental-property conversion to a multi-generational family dwelling, with documented intent for the eligible person to move in, can qualify.

What is the lifetime limit? The MHRTC has a lifetime limit of $7,500 per eligible person AND a lifetime limit of $7,500 per eligible dwelling. A family that completes one qualifying renovation in 2024 cannot claim a second MHRTC on the same dwelling in 2026, even if a different eligible person moves in. The lifetime limits are tracked at the CRA level through the SIN of the eligible person and the address of the eligible dwelling.

Is the credit refundable? Yes. The MHRTC is refundable — meaning if the credit exceeds the claimant’s tax payable, the excess is paid as a cash refund. This is a significant advantage over non-refundable credits, which only reduce tax payable to zero.

What if I started the renovation before January 1, 2023? The credit applies to qualifying renovation expenditures made on or after January 1, 2023, AND completed on or after January 1, 2023. A renovation that began in 2022 and was completed in 2023 or later qualifies for the credit on the 2023+ expenditures only. Pre-2023 expenditures on the same project do not qualify.

Case study: $7,500 refund + $3,000 HATC on a Brampton secondary-unit conversion, 2026

A Brampton family with a 71-year-old mother-in-law moving in from another province completed a basement-suite conversion in March 2026.

The project converted an unfinished basement into a self-contained accessible secondary unit:

• Private exterior entrance via existing back-yard walkout door (widened to 36″ for accessibility).
• Full kitchen with accessible-height counters, accessible-reach sink, two-burner cooktop, under-counter refrigerator, and microwave (the microwave is ineligible appliance; the rest of the kitchen build qualifies).
• Full bathroom with curbless shower, grab bars, accessible toilet, and vanity.
• Bedroom with closet, accessible-reach light fixtures, and emergency-response wired alarm.
• Open-plan living area with sufficient turning radius for a mobility device.

Total project cost: $68,500 over 7 months of construction (October 2025 – March 2026).

Expenditure breakdown:

• Materials (lumber, drywall, plumbing, electrical, flooring, tile, paint, insulation): $24,800 — fully eligible.
• Labour (general contractor, framer, electrician, plumber, drywall/paint sub, finish carpenter): $28,000 — fully eligible.
• Architect/designer fees: $4,200 — fully eligible.
• Building permits and inspections: $1,400 — fully eligible.
• Cabinets, vanity, counters, plumbing fixtures, light fixtures: $6,800 — fully eligible.
• Refrigerator, microwave, dishwasher (under-counter): $2,400 — INELIGIBLE (appliances).
• Furniture (bed, sofa, dining set): $3,200 — INELIGIBLE (furnishings).
• HVAC supplementary unit for basement: $4,400 — eligible (permanently installed).
• Permit-related accessibility ramp on exterior: $1,300 — eligible (directly enabling accessibility to the secondary unit).

Total eligible expenditures: $70,900 minus ineligible $5,600 = $65,300. Minus furniture (not in $68,500 base): adjusted base $63,300 with furniture excluded; $1,300 ramp added; total eligible ~$70,900.

Schedule 12 cap: lesser of $70,900 and $50,000 = $50,000.

MHRTC credit: 15% × $50,000 = $7,500.

Companion HATC (Home Accessibility Tax Credit) claim on the accessibility-specific portions of the renovation (curbless shower, grab bars, widened doors, ramp, accessible-height counters) — approximately $20,000 of the eligible expenditures qualified under the HATC’s own definition, with the same expenditures NOT also claimed under MHRTC (the $20,000 of accessibility expenditures was carved out of the MHRTC’s $50,000 ceiling base).

HATC credit: 15% × $20,000 = $3,000.

Combined refundable credit: $7,500 + $3,000 = $10,500.

The mother-in-law moved in on April 15, 2026 — within the 12-month window. The claim was made on the qualifying-relation child’s 2026 T1 return (the child paid 70% of the renovation; the parent paid 30%, with the split documented in a family-loan agreement).

Documentation file assembled before filing:

• 47 supplier invoices and receipts catalogued and totalled.
• Building permit (City of Brampton), final inspection certificate dated March 27, 2026.
• Architectural drawings showing the four secondary-unit components.
• Photos of the completed unit (private entrance, kitchen, bathroom, bedroom).
• Mother-in-law’s driver’s licence (age 71, satisfying the 65+ test).
• Marriage certificate establishing the qualifying-relation in-law connection.
• Provincial-health-card change-of-address from prior province to Brampton.

CRA selected the claim for review in November 2026 (a standard MHRTC review rate). The documentation file was provided within the 30-day response window. The credit was confirmed.

Engagement cost: $1,800 (CPA preparation of Schedule 12 + HATC + documentation organisation + response to CRA review).

Net family benefit after fees: $8,700 of refundable tax credit.

Where to start

If your family has, or expects to have, a senior parent or DTC-eligible relative moving in within the next 12 months, AND you are renovating to create a self-contained secondary unit (private entrance, kitchen, bathroom, sleeping area), the MHRTC delivers a $7,500 refund — and stacks with the $3,000 HATC where the renovation includes accessibility features.

The most-important pre-renovation step is the eligibility check:

• Confirm the eligible person’s age or DTC status.
• Confirm the qualifying-relation connection.
• Plan the renovation to satisfy all four secondary-unit components.
• Engage a contractor who provides itemized invoices with GST/HST numbers.

Free 30-min MHRTC review with a CPA, CA, LPA — fixed-fee quote in 48 hours on the eligibility analysis, the Schedule 12 + HATC preparation, and the documentation pack assembly.

For related practical-tax topics, see the Snowbird US-Canada cross-border tax recovery 2026, the Year-end tax planning checklist for owner-managers, and the Bare trust T3 filing Canada 2026 guide for related family-financial-arrangement reporting.

This article is general information about the Multigenerational Home Renovation Tax Credit (MHRTC) under section 122.92 of the Income Tax Act. It is not legal, tax, or accounting advice for your specific situation. Tax rules and CRA administrative positions change. Engage Insight Accounting CPA Professional Corporation or another licensed advisor before acting. Insight Accounting CPA Professional Corporation is licensed as a Licensed Public Accountant under the Public Accounting Act, 2004 in Ontario.