The New Multigenerational Home Renovation Tax Credit & How It Can Help Your Family
Being a family-run and started business, the members at Generation Construction genuinely understand the importance of family and the need to create a home that can accommodate multiple generations. This is why we, and so many other Canadian homeowners, are so excited about the introduction of the new refundable Multigenerational Home Renovation Tax Credit.
With this Tax Credit, homeowners will now have the opportunity to expand their homes to take care of family members without having to worry too much about taking on a significant financial burden.
What is the Multigenerational Home Renovation Tax Credit?
The Multigenerational Home Renovation Tax Credit is a new program that the Government of Canada launched on January 1st of this year, allowing homeowners to claim a non-refundable tax credit of up to 15% of $50,000 of eligible renovation expenses to a maximum of $7,500. This credit can be claimed for renovations made to a primary residence, with the purpose of creating a living space for a family member who is either a senior citizen or a person with a disability. The renovation must also include a bedroom, bathroom and kitchen for homeowners to qualify.
This tax credit is highly beneficial for homeowners looking to take in and care for a family member who fits this criterion. As many homeowners know, bringing in a family member to their preexisting home that was not built to withstand the additional member or members can be a challenge. However, with this credit, homeowners can renovate their space, expanding to build a bedroom, bathroom, or even a separate entrance, allowing an easier transition when expanding their household. This transition can also be made without stressing too much about the financial undertaking.
Qualifying for the Home Renovation Tax Credit
It's important to note that not all renovations will qualify for the tax credit. To qualify and receive the tax credit, the renovation must be made to a primary residence, include a bedroom, bathroom and kitchen, and be intended for the use of a senior citizen or a person with a disability. Additionally, the renovation must be permanent and not have been previously claimed for another tax credit or deduction.
For homeowners to claim the tax credit, they will need to keep receipts and other documentation of the renovation expenses, including the cost of labour and materials. All of which can easily be obtained from your contractor or construction team. We recommend notifying your team that you will require these items before the renovation starts just to prevent any issues or confusion.
Homeowners should know that they must also complete Form T1036, which is available on the Canada Revenue Agency (CRA) website.
As contractors who have worked on many home expansions, including those intended to expand their homes to take care of their families, we know this process can be a struggle as everyone works to adapt to the change and pay for the costly renovations. This is why we believe this tax credit is an excellent opportunity for homeowners to renovate their homes without feeling so much of the financial strain. Though the grant is only for a maximum of $7,500, we know that during a renovation, any financial aid is incredibly valuable.
We do want to stress that it is essential for you and your family to check with a professional tax advisor or your accountant to get a clear understanding of what expenses are eligible for the credit and to ensure you are following the proper process to claim the credit. However, with the help of a professional tax advisor and a contractor or contractor team, homeowners can utilize this credit to make the necessary changes to their homes to accommodate multiple generations of family members.