Short answer: the Multigenerational Home Renovation Tax Credit (MHRTC) is a refundable federal credit for renovation costs that create a self-contained secondary unit so a senior, or an adult eligible for the disability tax credit, can live with a qualifying relative. For the 2025 tax year the CRA sets it at 14.5% of up to $50,000 of qualifying expenditures, a maximum of $7,250 per claim, reported on line 45355.
Key takeaways
| Question | Short answer | Source |
|---|---|---|
| What is it? | Refundable federal tax credit for creating a self-contained secondary unit for multigenerational living | CRA line 45355 |
| How much? | 14.5% of up to $50,000 of qualifying costs; maximum $7,250 per claim (2025 tax year) | CRA |
| Who must live there? | A qualifying individual (65+ or adult eligible for the disability tax credit) with a qualifying relative | CRA — Who can claim |
| What counts as a secondary unit? | Private entrance, kitchen, bathroom and sleeping area; can be detached on the same land | CRA — Who can claim |
| When to claim | In the tax year the renovation is completed, on Schedule 12 / line 45355 | CRA — How to claim |
| Ontario permission | Up to three units on eligible urban lots, one of which can be in an ancillary building | Planning Act s. 16(3), s. 35.1 |
What the Multigenerational Home Renovation Tax Credit is
The MHRTC is a refundable credit on your income tax and benefit return. According to the Canada Revenue Agency, you can claim certain renovation expenses that create a self-contained secondary unit so a senior, or an adult eligible for the disability tax credit, can live with a qualifying relative.
For the 2025 tax year the CRA sets the credit at 14.5% of up to $50,000 in qualifying expenditures for each qualifying renovation that is completed, a maximum of $7,250 per claim. Those dollar figures are CRA program limits, not Modular X pricing. Because the credit is refundable, it can reduce tax owing or create a refund if the credit is larger than the tax you owe.
Who can claim
The CRA's eligibility checklist requires all of the following:
- You had renovation costs to create a secondary unit within the dwelling or on the property.
- The renovation was completed in the tax year you are claiming, regardless of when it started.
- One person living in the existing dwelling or the new unit is a qualifying individual: 65 or older at the end of the renovation period tax year, or 18 to 64 and eligible for the disability tax credit at any time in that year.
- This is the only MHRTC claim for that qualifying individual. The CRA allows only one renovation to be claimed for a given qualifying individual during their lifetime.
- The person claiming is an eligible individual: a resident of Canada for the full claim year who either intends to live in the dwelling within 12 months after the renovation ends (as the qualifying individual, their spouse or common-law partner, or a qualifying relation), or owns the dwelling (or is a trust beneficiary) and is a qualifying relation.
- A qualifying relation is 18 or older at year-end and is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual or of that person's cohabiting spouse or common-law partner.
- The eligible dwelling is in Canada, owned by the qualifying individual or a qualifying relation (or a trust they benefit from), and both the qualifying individual and a qualifying relation ordinarily inhabit it, or are reasonably expected to, within 12 months after the renovation ends.
If costs are shared, more than one eligible individual may split the credit, but only for expenditures each person incurred, and the combined claim cannot exceed the maximum. Confirm your situation with the CRA or a tax professional; Modular X does not give tax advice.
What counts as a secondary unit
The CRA defines a secondary unit as a self-contained housing unit with a private entrance, kitchen, bathroom and sleeping area. It must be newly constructed or created from living space that did not already meet local requirements to be a secondary dwelling unit, and it must meet applicable local permits, codes and by-laws.
A detached structure can qualify. The CRA says the secondary unit does not need to be physically part of the existing house as long as it is on the same land as the eligible dwelling. Usually that land is limited to half a hectare (about 1.24 acres), unless more land is needed to use and enjoy the home. That is why a garden suite or laneway suite on the same lot can fit the federal credit rules when the family and eligibility conditions are met, and when the city allows the building.
A bedroom-and-bathroom conversion without a kitchen does not qualify. The CRA's own example of converting a sunroom into a bedroom with an ensuite, but no kitchen, is not a secondary unit for this credit.
What expenses qualify
According to the CRA's expenses page, a qualifying expenditure must be a reasonable cost directly attributable to the qualifying renovation, made or incurred after December 31, 2023 and before the end of the renovation period, by an eligible individual (or a trust they benefit from).
That can include goods and services from professionals such as electricians, plumbers, carpenters or architects; building materials; fixtures; hiring equipment used for the work; building plans; and permits. If you do the work yourself, materials, fixtures, hired equipment, plans and permits can still qualify, but the value of your own labour and tools does not.
Expenses that do not qualify include routine maintenance, household appliances, electronic entertainment devices, housekeeping or outdoor-maintenance services, financing costs, amounts that were reimbursed, amounts without receipts, goods or services from a related person who is not GST/HST-registered, and amounts already claimed under the medical expense tax credit or the home accessibility tax credit.
How and when to claim
Claim in the year the renovation period ends. The CRA says the period begins when the first qualifying expenditure is made or incurred (for example, applying for a building permit) and ends when the renovation is completed (for example, final inspection). For 2024 and later years, enter the credit on line 45355 and use Schedule 12 to report expenses and calculate the credit.
Keep invoices that identify the vendor, address, GST/HST number if any, goods or work description, dates, amounts and proof of payment. You may claim more than one qualifying renovation in the same year if each is for a different qualifying individual and each meets the rules. The figures and forms above come from the CRA; they are not Modular X pricing or filing advice.
MHRTC vs loan and refinance options
The Multigenerational Home Renovation Tax Credit is not a construction loan. It is claimed after the work is finished, so it does not fund the build up front.
- Canada Secondary Suite Loan Program: announced but never launched. Budget 2025 says it will not be implemented. Full status: Canada Secondary Suite Loan Program explained.
- CMHC Refinance for secondary suites: a live insured-refinance product. CMHC allows owners of homes with up to four units to refinance up to 90% loan-to-value, with an as-improved value below $2,000,000 and amortization of up to 30 years. The borrower or a close relative must live in one of the units, the suite must be self-contained and meet local by-laws, stays shorter than 90 consecutive days are not allowed, the extra money must pay for building the suite, and CMHC approval is needed before construction or at an early stage.
For broader cost and incentive context in Ontario, see garden suite cost in Ontario.
Building the suite as a relation's primary residence? See the HST new housing rebate for modular homes and garden suites.
Ontario rules for the suite
Federal tax rules do not replace municipal zoning. Ontario's Planning Act s. 16(3) stops official plans from prohibiting, on a parcel of urban residential land, two units in a detached house, semi-detached house or rowhouse plus one unit in an ancillary building, or three units in the house when no ancillary building has a unit. Section 35.1 applies the same limits to zoning by-laws.
Your city still sets height, setbacks, floor area and soft landscaping, and a building permit is required. In Toronto, a garden suite must comply with the zoning by-law, the Ontario Building Code and tree regulations before a permit is issued (City of Toronto — Garden Suites). More detail: additional residential units in Ontario, granny flats and granny pods, and the garden suites hub.
Where Modular X fits
Modular X designs, permits and builds garden and laneway suites in modules across the GTA. We do not lend money or give tax advice. A feasibility check confirms what your lot allows before any design, so the plans and permits your lender or tax professional may need are based on a buildable layout. Begin at feasibility.
FAQs
Sources
- Canada Revenue Agency — Multigenerational Home Renovation Tax Credit (line 45355)
- CRA — Who can claim the MHRTC
- CRA — Expenses you can claim
- CRA — How to claim
- Government of Canada — Budget 2025, Annex 3
- CMHC — Refinance for Building Secondary Suites
- Planning Act, R.S.O. 1990, c. P.13, s. 16(3) and s. 35.1
- City of Toronto — Garden Suites
Disclaimer: Figures cited are market estimates provided for information only and are not a quote. Municipal rules, fees, and programs change — always verify current requirements with your local authority. Modular X provides exact pricing only after a site-specific feasibility review.