With more families of different generations sharing a residential space, and the need for more affordable housing, the this tax credit is long overdue.
What is the multigenerational home renovation tax credit and who qualifies? Read the below article to help answer this question plus more.
What is the multigenerational home renovation tax credit?
The Multigenerational home renovation tax credit is a refundable credit to assist with the cost of renovating an eligible dwelling to establish a secondary unit that enables a qualifying individual to live with a qualifying relation. The value of the credit is 15% lesser of qualifying expenditures and $50,000.
Who is a 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.
Who is a qualifying relation?
An individual who is:
· at least 18 years of age by the end of the year;
· at any time in the year, a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual or the qualifying individual’s cohabitating spouse or common-law partner.
What is an eligible dwelling?
A housing unit located in Canada that is:
· owned by the qualifying individual or a qualifying relation of the qualifying individual at any time in the renovation period taxation year and where they intend to primarily reside within 12 months after the renovation period.
What is a secondary unit?
A self-contained housing unit with private entrance, kitchen, bathroom and sleeping area. This can be newly constructed or added onto an existing space that did not meet requirements to be considered a secondary dwelling unit.
What types of expenses do not qualify?
Some items that cannot be claimed:
· Furniture
· Household appliances and devices
· Routing repair, indoor and outdoor maintenance, security, or landscaping
· Cost of financing the renovation
How is the credit calculated?
It is calculated by multiplying the lowest personal income tax rate (15%) by the lesser of:
· $50,000
· the amount of qualifying expenditures incurred by the eligible individual
How much can I claim and how can I claim?
Eligible individuals can claim expenses incurred that does not exceed $50,000. If the claimants cannot agree as to what portion of the qualifying expenditures each can deduct, the Minister may set the portions.
Only one qualifying renovation is permitted during the lifetime of a qualifying individual.
Can I hire a family member to perform the work or help me?
Expenses are only eligible of that person is registered for GST/HST.
Information has been provided by the CRA.
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