A new tax credit for multigenerational homes

Since January 1st, the federal government offers a new tax credit to encourage and support households who want to live with their parents or a loved one living with a disability.

This is the Multigenerational Housing Renovation Tax Credit, which aims to reduce the cost of the work to create a second unit for a person aged 65 and over or with a disability.

The second unit can be a new construction or be built on an existing space, and must include a kitchen, bathroom, sleeping area and a private entrance.

Note that the house being renovated must already be lived in or have tenants within 12 months of the work being completed.

The value of the tax credit is 15% of the lesser of the eligible expenses or $50,000, to a maximum of $7,500.

Eligible expenses include building materials, permits, professional services, labour costs, fixtures and equipment rentals.

The tax credit was announced as part of a series of measures promised by Ottawa in the most recent federal election to make housing more affordable across the country, and included in the 2022 budget.