Creating a secondary suite can quailfy you for the multigenerational tax credit

April 19, 2024

Catherine Marshall

Everything “multigenerational” is trending it seems, and even politicians are jumping on the band wagon.

There’s a new tax benefit available for your 2023 tax return called the Multigenerational Home Renovation Tax Credit (MHRTC).

Adding a suite

If you are adding a “secondary unit” to your home so that a relative or caregiver can move in to help a senior, or a parent can move into in to your home to get assistance, you make it more affordable by claiming the MHRTC, according to the website, Everything Zoomer. 

To qualify for this credit, the secondary suite must have the following features:

If you did this kind of work in 2023, get your receipts ready to file because you can claim up to $50,000 of the renovation cost as a tax credit. In return you’ll get a tax credit of 15% even if you don’t owe any tax.  

Now $7,500 is not likely to encourage you to run out and hire a renovator.  Average renovations run in the range of $600 per square foot in Toronto. So even a modest 650-square-foot secondary suite could be $400,000ish.

Tax credits expand project

However, if a renovator is quoting on the secondary suite and you want to make the rest of your home more accessible with items such as:

then adding these into the project may get the additional work done at a more affordable additional cost.

These upgrades are made more attractive by a couple of tax credits that have been around for a while: the Home Accessibility Tax Credit (HATC) and the Disability Tax Credit (DTC).  Like the MHRTC, the amount involved seem relatively small at face value.

However, the tax expert quoted by Everything Zoomer had some interesting advice about these taxes that could make it worth pursuing them.

Double dipping

Tax tips for making multigenerational housing more affordable including claiming tax credits

Gerry Vittoratos, a Montreal-based expert for the tax preparation software company UFILE, told Everything Zoomer that the DTC can be retroactive if you undergo the eligibility assessment process, and you have suffered from the disability up to 10 years. So, if you’ve had tax owing at any point in the last decade, the government will pay you the DTC refund in one lump sum. Depending on your tax situation, the DTC could be worth $1,500 to $2,500 for each year of disability.

If you have qualified for the DTC you also can qualify for the HATC, and Vittoratos says the beauty of that credit is that you can “double dip” – your renovation expenses may also qualify as a medical expense, and you can claim for both on your tax return. 

As a new builder whose FlexPlex building is perfect for multigenerational living and creating up to three additional suites in a home, I am curious how these tax credits can be used in my next building.  If you know, let me know!

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