MHRTC $7,500 Tax Credit Toronto: 2026 Eligibility Walkthrough

# MHRTC $7,500 Tax Credit Toronto: 2026 Eligibility Walkthrough

The Multigenerational Home Renovation Tax Credit (MHRTC) is a federal refundable tax credit established in 2023 that refunds 15% of up to $50,000 in eligible renovation expenses, capped at $7,500, to homeowners who build a qualifying secondary unit for a senior or disabled relative. The credit is refundable, which means the CRA pays it out even if the homeowner has no taxes owing. For Toronto homeowners planning a multigenerational in-law suite in 2026, the MHRTC is often the deciding financial factor.

This post walks through eligibility on the construction side — what RenoHouse documents and delivers so a homeowner's CPA has clean paperwork to file the claim.

Tax Disclaimer Up Front

RenoHouse does not provide tax advice. The MHRTC is claimed on the homeowner's tax return (Schedule 12). Eligibility — whether the qualifying individual passes the senior or DTC test, whether the homeowner relationship is qualifying, whether the timing of expenses is correct — must be confirmed with a CPA or tax professional. We provide construction documentation that supports the claim. The CRA's published guidance is the controlling reference; this post is a contractor's plain-language summary.

What the Credit Pays

• 15% of eligible expenses, up to $50,000 in expenses.
• Maximum credit: $7,500.
• Refundable — paid out even if no taxes owing.
• Once per qualifying individual per lifetime.
• Claimed on Schedule 12 of the homeowner's T1 return.

Who Is the "Qualifying Individual"

The qualifying individual is the relative who will live in the suite. They must be one of:

• A senior aged 65 or older at the end of the tax year in which the renovation is claimed, OR
• An adult eligible for the Disability Tax Credit (DTC) at any age over 18.

The qualifying individual must be a relative of the homeowner — broadly defined to include parents, grandparents, siblings, aunts, uncles, nieces, nephews, children, grandchildren, in-laws, and their spouses/common-law partners.

The qualifying individual must live (or intend to live) with the homeowner in the renovated home within 12 months of the renovation completion, and the renovation must be undertaken to enable that cohabitation.

Who Is the "Eligible Individual" (the Person Claiming)

The eligible individual claiming the credit is typically the homeowner. This can be:

• The qualifying individual themselves (e.g., a 67-year-old homeowner renovating their own home for a future suite).
• The qualifying individual's spouse or common-law partner.
• A relative of the qualifying individual who owns the home.
• The qualifying individual's cohabiting relative (parent, child, sibling, etc.).

The credit is claimed once per qualifying individual per lifetime, but it can be split across multiple eligible individuals if needed (e.g., two siblings each claim a portion).

What Counts as a "Qualifying Renovation"

A qualifying renovation creates a secondary unit for the qualifying individual. The secondary unit must be self-contained with:

• A separate entrance.
• A kitchen.
• A bathroom.
• A sleeping area.

The unit can be inside the dwelling (basement suite, main-floor suite, second-floor suite) or attached to it. The CRA's guidance treats a properly built ARU (laneway or garden suite) on the same property as eligible in many cases, though most MHRTC projects RenoHouse sees are within-dwelling suites.

The unit does not need to be lockable from the main dwelling. A connecting interior door is allowed. The functional test is whether the qualifying individual could live there independently.

Eligible Expenses

Expenses that the CRA generally accepts as MHRTC-eligible:

• Building permit fees.
• Professional design and drafting (architect, designer, structural engineer).
• Materials (lumber, drywall, insulation, fixtures, finishes, cabinetry, flooring).
• Labour and contractor fees.
• Equipment rental.
• Building plans and inspection costs.
• Plumbing fixtures (toilet, sink, tub, shower).
• Kitchen cabinetry, counters, sink, range, refrigerator (if part of the suite kitchen).
• HVAC modifications specific to the suite.
• Electrical work specific to the suite (ESA-permitted).

Expenses that are generally NOT eligible:

• Routine maintenance or repairs of existing space.
• Furniture and decor.
• Household appliances not part of the suite (e.g., main-house kitchen upgrade).
• Outdoor maintenance (lawn, snow removal).
• Costs financed by other government programs (no double-dipping).

The homeowner's CPA confirms the line-by-line eligibility against the homeowner's specific facts.

Timing Rules

• The renovation must be substantially complete during the claim year.
• Expenses must be incurred during a "qualifying renovation period" defined by the CRA.
• The qualifying individual must live in the home within 12 months of completion.

This timing matters: a project that drags across two tax years can sometimes split the credit across years, but the rules are specific. Confirm with a CPA before sequencing payments around year-end.

What RenoHouse Provides for the Claim

On every multigenerational in-law suite project, RenoHouse delivers:

• Itemized invoices with line items separating MHRTC-eligible work from non-eligible (if any).
• Building permit (city-issued, with permit number).
• ESA notification number for electrical work.
• Plumbing permit documentation.
• Final inspection certificates from city and ESA.
• As-built drawings showing the self-contained suite (kitchen, bathroom, sleeping area, entrance).
• Sub-trade invoices where applicable.

The homeowner provides this package to their CPA, who completes Schedule 12 on the T1.

Stacking with Other Programs

The MHRTC stacks with most other Canadian programs as long as the same dollar of expense is not claimed twice:

• Toronto HELP loan (2-3% interest, up to $125,000) — energy-related portions of the project.
• Enbridge HER+ rebates — envelope and HVAC measures.
• Greener Homes Loan ($40K interest-free) — heat pump, insulation, solar.
• Provincial Ontario Home Renovation Savings Program (HRSP) — up to $10,000 on eligible measures.

The MHRTC itself is a tax credit (back-end refund), not a front-end rebate or loan, so it stacks cleanly with financing programs.

A Worked Example

Toronto homeowner, age 58, renovates a basement to create a self-contained suite for their 71-year-old mother, who will move in 6 months after completion.

The homeowner files Schedule 12 and receives a $7,500 refund regardless of taxes owing.

Common Eligibility Mistakes

• No separate entrance. Disqualifies the suite from the self-contained test.
• No cooking facilities (microwave-only "kitchenette"). Generally does not satisfy the kitchen requirement.
• Qualifying individual moves out within 12 months. Can affect the claim; check with CPA.
• Renovation completed before the qualifying individual is identified. The credit is tied to the relationship; speculative pre-build does not qualify.
• Expenses incurred outside the qualifying renovation period. Timing rules matter.

Next Steps

The MHRTC is the strongest single financial driver for multigenerational in-law suites in Toronto for 2026. The construction side is straightforward when scoped correctly. The tax side belongs to the homeowner's CPA.

Book a scoping visit at [/services/home-renovation/multigenerational-inlaw-suite](/services/home-renovation/multigenerational-inlaw-suite). For the full pillar guide, see [Multigenerational In-Law Suite Toronto: 2026 Complete Guide](/blog/multigenerational-inlaw-suite-toronto-2026-complete-guide). For cost comparison across suite locations, see [In-Law Suite Cost Toronto: Comparison](/blog/inlaw-suite-cost-toronto-comparison). For the permit and process walkthrough, see [Multigen Suite Permits Toronto: Process](/blog/multigen-suite-permits-toronto-process).