As all Canadians know, home ownership is getting more unaffordable regardless of
the buyer’s age. Rental suites are becoming increasingly expensive as rents in major
markets soar and short-term rentals, like Airbnb, replace traditional units which
normally would have been available.
We are seeing more multigenerational purchases of homes with the parents living in
their self-contained basement suite and a child with their spouse and/or dependents
The government has realized that as Baby Boomers age and home ownership
excludes an entire generation of Millennials and Gen Xers, a viable solution would be
to encourage the concept of shared home ownership. This is especially true with the
shortage of quality medical senior care, a lack of residential homes and unaffordable
rents/leases for those who desire downsizing.
In the 2022 Budget the Liberals introduced a tax driven incentive to assist families
who may be in this situation.
What exactly is the MHRTC?
It is a refundable Tax Credit for qualifying expenditures related to a qualifying
renovation. The qualifying renovation is defined as a secondary unit within a dwelling
that will be used for a qualifying individual and will be the lesser of 15% of the
expenditure, or $50,000.
Who is a qualifying individual?
An individual who is:
· 65 years of age or older before the end of the renovation period taxation year
· 18 years of age or older before the end renovation period taxation year for whom an
amount is deductible under the disability tax credit.
The person must either be an adult child, parent, grandparent, grandchild, sibling,
aunt/uncle, or niece/nephew of the homeowner (or their spouse).
What is a qualifying renovation?
It refers to a renovation, addition or alteration to an existing residence that will allow
for permanent living arrangements for the person or couple that will live in the unit.
This secondary unit must be self-contained with its own private entrance, kitchen,
bathroom and sleeping area.
What expenses qualify?
It is considered a reasonable outlay or expense that is directly attributable to making
the unit livable for a qualifying individual by the homeowner. This includes the cost of
goods and services used exclusively for the suite, including expenses for permits and
Typically work performed and invoiced by carpenters, electricians, plumbers, and
architects would qualify.
Are certain expenses not eligible?
- Yes, if you do the work yourself the value of your labour is not eligible. The cost of the goods are qualifying expenses.
- A family member can do the work and their labour is an eligible expense if they are registered for GST/HST and declare it as earned income.
- The cost of annual, recurring, or routine repair or maintenance.
- Cost for housekeeping, security monitoring, gardening, outdoor maintenance, or similar services.
- The financing costs for the renovation.
- Expenses that have already been deducted under the Medical Expense Tax
- Credit and/or Home Accessibility Tax Credit.
- Those not supported by actual receipts.
Expect to see more of these Tax Credits to reward Canadians who are assisting
qualifying family members navigate through ultra expensive and limited rental options.
The government has realized that they have failed many families in their pursuit of
affordable housing and Tax Credits is one way to encourage more shared accommodations.