Multigenerational households—these composed of three or extra generations below one roof—are Canada’s fastest-growing kind of family. From 2001 to 2021, they elevated by 50%, in accordance with numbers from the 2021 census. Elements contributing to this outstanding spike embody bloated housing prices, a good actual property market, rising rates of interest and an ageing inhabitants. For Canadians with ageing mother and father or different family who require care, establishing a multigenerational residence could make plenty of sense, virtually and financially. Nonetheless, there are substantial prices related to making a secondary unit, and that’s the place the brand new Multigenerational Dwelling Renovation Tax Credit score (MHRTC) is available in.
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What’s the Multigenerational Dwelling Renovation Tax Credit score (MHRTC)?
The MHRTC is a brand new refundable tax credit score, launched within the 2022 funds, that’s designed to help with the price of renovating a house to create a secondary unit for a qualifying relative. The credit score took impact on Jan. 1, 2023.
With this credit score, you possibly can declare 15% of the worth of your renovations costing as much as $50,000. In different phrases, if you happen to spend $50,000 or extra, essentially the most you possibly can declare is $7,500 ($50,000 x 15% = $7,500). If you happen to spend much less, the credit score is 15% of your qualifying expenditures.
Who’s eligible for the Multigenerational Dwelling Renovation Tax Credit score?
The MHRTC is on the market for a really particular function. To be eligible, you have to be renovating your own home with a view to create a secondary unit for a “qualifying relative”:
- A member of the family who’s age 65 or older earlier than the top of the renovation interval taxation 12 months
- A member of the family who qualifies for the incapacity tax credit score and is not less than 18 earlier than the top of the renovation interval taxation 12 months
A secondary unit have to be self-contained and have its personal entrance, kitchen, rest room and sleeping space. Observe that there’s just one such renovation per member of the family allowed, which means that if you happen to declare the MHRTC to construct a unit on your dad or mum, for instance, your sibling can’t additionally construct a unit on your dad or mum and declare the credit score.
What renovation bills can I declare for the MHRTC?
The prices of most renovation items and companies are allowed. These may embody permits, constructing supplies, tradespeople and tools leases. Observe that issues like family home equipment, outside upkeep and safety monitoring usually are not eligible. Additionally, if you happen to do the work your self, you can not declare the worth of your labour or your instruments.
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How do I declare the MHRTC?
Ensure you hold all documentation of your expenditures, similar to invoices and receipts, and that they embody itemized lists of purchases; descriptions of labor carried out; distributors’ names, enterprise addresses and GST/HST numbers; and the dates of buy and supply.
The MHRTC have to be claimed in the identical tax 12 months that the renovations are accomplished, which means that if you happen to start your renovations in 2023 and full them in 2024, you’ll apply for the tax credit score within the 2024 tax 12 months.
While you full your tax return, you possibly can declare the MHRTC on line 45355 of your T1 common tax kind. The Canada Income Company (CRA) has extra information about easy methods to declare the MHRTC.
MHRTC eligibility
Undecided if you happen to qualify? Step one: learn the foundations on the Authorities of Canada web site. The CRA can also be responding to eligibility considerations raised because the MHRTC was introduced in 2022.