Multigenerational Home Renovation Tax Credit: Does Your In-Law Suite Qualify?
Updated · 7 min read · By Gilbert Brothers
In this guide
The short answer
An in-law suite can qualify for the federal multigenerational home renovation tax credit if it is self-contained, with its own entrance, kitchen, bathroom and sleeping area, and meets local permit and by-law rules. It must also let a person aged 65 or older, or an adult eligible for the disability tax credit, live with a qualifying relative. The credit is the lowest federal income tax rate for the year the work ends, applied to up to $50,000 of costs. That is 14.5% for 2025 (most $7,250) and 14% for 2026 and later (most $7,000). It is refundable and claimed after the work is finished. This is not tax advice: ask an accountant.
What follows is what the Canada Revenue Agency (CRA) and the Income Tax Act say, as of October 2026. The rules can change, so read CRA's credit pages for the year your work finishes before you rely on any figure here. Any credit is claimed by you, on your own tax return.
What the credit pays, and when
CRA calls it a refundable credit. If the credit is more than the tax you owe, you receive the difference as a refund. You can claim up to $50,000 of qualifying costs for one qualifying renovation.
The Income Tax Act says to multiply your costs by the "appropriate percentage" for the year the renovation ends (section 122.92). Section 248 defines that as the lowest percentage in the federal tax rates for the year. A 2026 statute set the lowest rate at 14.5% for the 2025 tax year and 14% for 2026 and later years (S.C. 2026, c. 2, section 2).
| Tax year the work ends | Lowest federal rate | Most the credit can pay on $50,000 of costs |
|---|---|---|
| 2025 | 14.5% | $7,250 |
| 2026 and later | 14% | $7,000 |
CRA's credit page is still written for tax year 2025 and shows 14.5% and $7,250. Read CRA's page for the year your work ends, and ask an accountant which year applies to you.
It pays after the work, in the form of a tax refund. It does not pay for construction. For ways to fund the build itself, see how a basement suite is paid for.
Does your in-law suite qualify?
"In-law suite" is a popular name, not CRA's test. CRA lists conditions, and you need all of them.
| CRA's condition | What it means for your plan |
|---|---|
| A secondary unit: self-contained, with a private entrance, kitchen, bathroom and sleeping area, that is newly built or created from living space that did not already meet local requirements to be a secondary dwelling unit | A bedroom and bathroom with no kitchen does not count. CRA's own example of a converted sunroom with a bedroom and ensuite, but no kitchen, does not qualify. If the space is already a legal secondary unit, the credit may not apply, so ask an accountant before you count on it. |
| It meets applicable local requirements, permits, codes and by-laws | In Peterborough, start with the City's rules for a basement suite. |
| A qualifying individual lives in the home or the new unit: aged 65 or older at the end of the year the renovation ends, or 18 to 64 and eligible for the disability tax credit | Check the person's age at the end of the year the work finishes, not today. |
| A qualifying relation also lives there | The relation must be 18 or older. |
| The home is owned by the qualifying individual or a qualifying relation, and both live in it or are reasonably expected to within 12 months after the renovation period ends | CRA's example of a relative who moves in months after the unit is finished still qualifies. |
| It is the only claim for that qualifying individual | CRA says only one renovation can be claimed for a qualifying individual in their lifetime. |
CRA defines a qualifying relation as 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. Check your own family against that list. The Act describes a qualifying renovation as one "undertaken to enable the qualifying individual to reside in the dwelling with a qualifying relation of the qualifying individual" by establishing a secondary unit. CRA's example of a live-in caregiver who is not a relative does not qualify.
The unit can be a separate building on the same land. CRA says the land that counts is usually limited to half a hectare (1.24 acres).
What counts as a cost
CRA says a qualifying cost is reasonable, directly attributable to the renovation, and paid or incurred after December 31, 2023 and before the renovation ends. It can include goods and services, including work by professionals such as electricians, plumbers, carpenters or architects, plus permits and equipment rentals. If you do the work yourself, your own labour and tools do not count.
CRA lists what does not count:
- Household appliances and home-entertainment devices
- Routine repair or maintenance
- Financing costs for the renovation
- Anything reimbursed, including through other assistance you receive
- Costs without receipts
- Costs already claimed under the medical expense or home accessibility credits
- Goods or services from a person related to you or the qualifying individual, unless that person is registered for GST/HST
Here is a made-up example. Say the bill is $52,000, and it includes $3,500 of appliances and $1,500 of financing costs. That leaves $47,000 of qualifying costs. At 14%, the rate for 2026 and later, the credit is $6,580. At the 14.5% that applied for 2025 it would be $6,815. Neither is the maximum.
For documents, CRA asks for invoices that identify the contractor, describe the work and the address, show the amount, and show proof of payment in full. Ask any contractor for an itemised invoice and keep your payment records.
When you claim, and who claims
CRA says the renovation period starts when the first qualifying cost is incurred, for example when you apply for a building permit. It ends when the renovation is complete, for example when it passes final inspection. You claim in the tax year the period ended, even if the work took more than one year.
The person who claims is an eligible individual who paid the costs. CRA says an eligible individual either lives, or intends to live, in the home within 12 months after the work ends and is the qualifying individual, that person's cohabiting spouse or common-law partner, or a qualifying relation; or owns the home and is a qualifying relation. In CRA's example, one family member paid $10,000 toward the work but neither owned nor lived in the home, and could not claim it. Family members who share costs can split the credit, but each can claim only what they paid, and together they cannot claim more than $50,000 of costs. Each claimant has to meet CRA's conditions on their own. CRA uses Schedule 12 to calculate the claim.
Programs people confuse with it
The Home Accessibility Tax Credit is a separate credit for accessibility work, and the two are easy to mix up. It is non-refundable, it has its own conditions, and the same cost cannot be claimed under both. The guide to the Home Accessibility Tax Credit explains it.
| Program | What it is | Where to read more |
|---|---|---|
| Home Accessibility Tax Credit | A non-refundable credit on up to $20,000 a year of eligible accessibility costs for a qualifying individual. | Bathroom costs and accessibility |
| Save on Energy Home Renovation Savings Program | Ontario rebates for energy upgrades such as insulation and heat pumps. Bundled rebates start with a home energy assessment. | Save on Energy |
| Peterborough Renovates | The City's income-tested repair and accessibility funding. | Paying for a basement suite |
Put the questions in order
Before you build, ask an accountant who in your family should claim, whether the unit and the people fit CRA's conditions, and how any rental income is treated. Ask the City what your suite needs to meet the local requirements. For a basement suite project, Gilbert Brothers gives a free estimate at your home and a quote for the whole job before work starts. See basement renovations or get in touch.
Frequently asked questions
Does a basement suite I rent to a tenant qualify?
CRA's conditions are about a qualifying individual living with a qualifying relation, and its example of an unrelated live-in caregiver does not qualify. If your suite will have a tenant, ask an accountant before you count on the credit.
Can I claim the credit and the Home Accessibility Tax Credit for the same cost?
No. CRA says you cannot claim the same expense under more than one credit, including the medical expense and home accessibility credits.
Can more than one family member claim?
Yes, if each is an eligible individual (the test is explained above) who paid part of the cost. Each claims only what they paid, and the total cannot be more than $50,000 of costs.
My contractor says the work qualifies for a credit. Can I rely on that?
Ontario.ca says that if a contractor tells you the work qualifies for a government rebate or credit, it is your responsibility to make sure that you qualify. It advises checking with the ministry, department or agency that offers the credit, rebate or grant. For this credit that is the Canada Revenue Agency, so start with CRA's credit pages and ask an accountant. The province's advice is in Your rights when starting home renovations or repairs.
Do I claim the year I start the work?
No. You claim in the tax year the renovation is completed, even if the work started earlier.