Multi-Gen Family Life? Consider a Family Suite

Evelyn Jacks

The Boomers had long dubbed been dubbed the “sandwich generation”.  But increasingly, Gen X and Gen Y are embracing the reality of multi-generational caregiving.  University age children are still living at home well into their 20s – even 30’s.  Elder family members have also thrived with caregiving by family members.  With the affordability crisis, family life is redefining itself in Canada.  That’s why tax and government assistance available for multi-gen family life is an important and hot topic. The last few federal budgets, including April 16, 2024 have promoted the trend to build secondary suites for these purposes with some tax breaks.  Consider the following:

A New  Multigenerational Home Renovation Tax Credit. Now in its second year, this is a refundable tax credit provides 15% of up to $50,000 to a maximum of $7500, generated when a tax return is filed.  Canadian households which construct a secondary suite in or on the taxpayer’s property to provide a senior or disabled adult will qualify. In the case of adults with disabilities, these individuals must be at least 18 years of age and must be eligible for the Disability Tax Credit. This credit is not necessary for senior residents of the suite, however.

The qualifying expenditures that can be claimed must be paid after December 31, 2022, for work or services that occurred after that date.  The credit is claimed by an eligible taxpayer, spouse or qualifying relation of the person who ordinarily resides in the eligible building within 12 months after the end of the renovation period. Those criteria can be quite complex:

Eligible Individuals for the MHRTC Claim.  There is no claim if the eligible individual is not a resident in Canada throughout the tax year. This person must also ordinarily reside, or intend to ordinarily reside, in the eligible dwelling within 12 months of the end of the renovation period of a qualifying renovation.  More specifically, the eligible individual is also defined as one of the following (warning - it’s quite a confusing definition):

• A qualifying individual
• The cohabitating spouse or common-law partner of a qualifying individual (at any time in the tax year in which the claim is made)
• A qualifying relation of a qualifying individual Or
• someone who owns the eligible dwelling (or is the beneficiary of a trust that owns the eligible dwelling) 
• The credit may be split between claimants so long as the total claim does not exceed $50,000.  
• Use Schedule 12 and line 45355 of the T1 return. 
• Can a detached “granny suite” qualify for this credit?  CRA has clarified their position on this.   Specifically, the renovation costs were incurred to create a secondary unit within the dwelling or on the property.  So, the answer to the “granny suite” question is yes.

A Secondary Suite Loan Program.  Under this proposed program, there is no age or disability requirement for inhabitants.  Rather, the government will provide $40,000 in low-interest loans to homeowners who wish to add a secondary suite to their home in order to rent it out or house family members.  The idea is to increase “density” in communities.  With this will come consultations on mortgage insurance changes required for these purposes.  This could include changes to regulations, refinancing, maximum loans and price of homes for these purposes. 

Together the two programs can meet a government goal to increase the “density” of family life by bringing multi-generations together. Unfortunately, according to the budget proposals, the implementation date for the program is not until 2025-2026.

Make a Difference. Families can leverage resources to make food and shelter costs more affordable  and in the process may find they are increasing property values by investing in the new suite owned by the household.  Whether this will have the desired effect of making more housing available as boomers downsize or Gen Z stays home longer remains to be seen.    

However, advisors can make a difference by letting their clients know about these two programs to help them settle into an expanding family life with more financial resources, thanks to the tax system,  whether it is with young or old family members who need access to home care and affordability options.