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The Multigenerational Home Renovation Tax Credit: What a Vancouver Laneway Home or Suite for a Parent Can Claim

By Costar ConstructionNovember 1, 2026

If your mother, your father or an older relative is going to live in a new home on your Vancouver lot, the federal government may refund part of what you spend to build it. The Multigenerational Home Renovation Tax Credit is a refundable credit that the Canada Revenue Agency (CRA) says covers renovation costs "to create a self-contained secondary unit." The unit must let a senior, or an adult who is eligible for the disability tax credit, live with a qualifying relative.

This post walks through what the credit pays, who has to live in the home, what counts as a unit, which costs count, and the dates that decide which year you claim. A laneway home behind your house and a suite inside a new house can both fit. Every rule below comes from the CRA's own pages, which we read on October 17, 2026. We report what the CRA says. Your accountant tells you how it applies to your return.

What the Credit Pays

On the CRA's page for the 2025 tax year, the credit is 14.5% of your qualifying costs, up to a maximum of $7,250 for each claim. The costs are capped at $50,000 for each qualifying renovation that is completed.

The CRA gives two examples. A person with $70,000 of qualifying costs claims on $50,000, which is a credit of $7,250. A person with $30,000 of qualifying costs claims $4,350. The credit is refundable, which means you receive money back even when it is larger than the tax you owe. In the CRA's first example the person owed $2,000 before the credit and received a refund of $5,250 after it.

The rate and the limits are set for each tax year. Open the CRA page for the year in which your renovation is completed before you fix a budget around the number.

Who Has to Live in the Home

The credit starts with a question to settle early: who is this home for? The CRA names three roles.

The qualifying individual is the older or disabled person the unit is built for. The person is either 65 or older at the end of the tax year of the renovation period, or 18 to 64 and eligible for the disability tax credit.

The qualifying relation is a person who is 18 or older and is 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. The unit must let the qualifying individual live with a qualifying relation.

The eligible individual is the person who makes the claim. This person is a resident of Canada for the whole year, lives or plans to live in the home within 12 months of the end of the renovation period, and is the qualifying individual, that person's spouse or partner, a qualifying relation, or an owner of the home who is a qualifying relation.

The home itself must be owned by the qualifying individual or a qualifying relation, and both of them must live there within 12 months after the renovation period ends.

Two limits matter to a family planning ahead. First, only one renovation can be claimed for a qualifying individual in that person's lifetime. In the CRA's example, a son claimed the credit for his mother on his 2025 return, so her grandson could not claim it for a second unit in 2026. Second, a caregiver who is not a relative does not satisfy the rule. The CRA's example is an adult with a disability who finished a basement apartment for a live-in caregiver, and the CRA says that renovation does not qualify.

What Counts as a Secondary Unit

The CRA describes a secondary unit as a self-contained housing unit with a private entrance, a kitchen, a bathroom and a sleeping area. It is either newly built or created from living space that did not already meet local requirements to be a secondary dwelling unit. It also has to meet the applicable local requirements, permits, codes and by-laws.

The CRA says the unit can be a separate building, as long as it is on the same land as the home. That is the rule that lets a laneway home qualify. A suite inside a new house qualifies on the same terms.

Pay attention to the kitchen. In another CRA example, a son converted a sunroom into a bedroom with an ensuite bathroom and a separate entrance for his mother. He did not add a kitchen, because she would not cook for herself. The CRA says the space is not a secondary unit, because a secondary unit needs a separate entrance, bedroom, bathroom and kitchen. A parent's home planned without a kitchen has no credit.

The unit also has to meet local requirements, and the CRA lists permits among them. In Vancouver that means a City permit for the work. Our post on what the R1-1 rules allow behind your house covers the size, height and yard limits for a laneway home. Our post on planning a suite into a new house covers the suite route, and our laneway home guide covers the whole process.

What Costs Count

The CRA allows a reasonable cost that is directly attributable to the qualifying renovation, made or incurred after December 31, 2023, and made or incurred by an eligible individual. These costs count:

Professional work. Goods and services, including work by electricians, plumbers, carpenters and architects.
Permits. The outlay for permits the work requires.
Equipment rentals. Rental of equipment used in the renovation.
Materials, if you do the work yourself. Building materials, fixtures, equipment rentals, building plans and permits count, and the value of your own labour and tools does not.

The CRA also lists what is left out:

Appliances. Household appliances do not count, and neither do electronic home-entertainment devices.
Routine upkeep. Annual, recurring or routine repair and maintenance.
Financing costs. Financing costs for the renovation are left out.
Costs paid back to you. Anything that can reasonably be considered reimbursed, including GST/HST rebates and other assistance you receive or are entitled to receive.
Costs claimed elsewhere. A cost used in this claim cannot be used again for the medical expense tax credit or the home accessibility tax credit.
Costs with no receipt.
Work by relatives. Goods or services from a person related to you or to the qualifying individual do not count, unless that person is registered for GST/HST.

The Dates That Set the Tax Year

The CRA's rule is that you claim the renovation for the tax year in which the renovation period ends, even if the work took more than one year. The renovation period begins when the first qualifying cost is made or incurred, and the CRA's example is applying for a building permit. It ends when the renovation is completed, and the CRA's example is passing the final inspection.

The CRA's own example shows how this works. A person paid the first cost in April 2025, and the renovation passed its final inspection in July 2026, so the claim goes on the 2026 return. The qualifying individual does not need to move in by the end of that year. In another CRA example, a small house was ready in October 2026, the aunt moved in April 2027, and the claim still went on the 2026 return, because she planned to move in within 12 months.

For a Vancouver laneway home, the permit application starts the renovation period and the final inspection ends it. Our permit timeline post walks through the stages in between. A final inspection passed in the last week of December goes on one year's return, and one passed in the first week of January goes on the next. Ask your construction manager for the likely inspection date, and make that date part of the schedule discussion at the start.

Many families pay for a parent's home together. The CRA allows the credit to be split between people who share the costs, when each person who claims is an eligible individual, each claims only the costs they paid, and the total claimed across everyone is no more than $50,000 of costs.

The CRA's example has two people who paid $29,000 and $33,000 toward a $62,000 renovation. Because the cap is $50,000, they agree how to divide it. They can split it in proportion to what each paid, which gives $23,500 and $26,500. Or one can claim everything they paid and the other claims the balance up to $50,000.

Ownership and residence matter. In the CRA's example of three adult siblings who help their father move into a house one sibling owns, the sibling who owns the house and the father could each claim the costs they paid. The third sibling paid $10,000 but neither owned nor lived in the home, so that amount could not be claimed. Agree early who owns the home, who pays which invoice, and who claims.

Keep the Paper

The CRA says your supporting documents must clearly identify what was bought or done. Each invoice should show:

The vendor or contractor, its business address and its GST/HST registration number, if it has one.
A description of the goods, with the date they were bought and delivered, or a description of the work, with the date and the address where it was done.
The amount of the invoice.
Proof of payment. The invoice must show payment in full, or come with a credit card slip or a cancelled cheque.

Ask your builder to issue invoices that carry these items, and to list appliances on their own lines so you can leave them out of the claim.

Six Planning Steps

Name the Qualifying Person First. Decide who the home is for before the drawings start. The age or disability status of that person decides whether any claim exists, and a relative can only be used once.

Put a Kitchen in the Unit. The CRA's sunroom example shows what happens without one. Our post on designing a laneway home for a parent, a grown child or a tenant covers how the ground floor can hold a bedroom, a bathroom and a kitchen together.

Choose the Finish Date on Purpose. The year of the final inspection is the year of the claim. A schedule that slips from December into January moves the claim by a year.

Agree Who Pays What. If several relatives pay, each pays and keeps the receipts for their own share, and the family decides in advance how the $50,000 limit is divided.

Separate the Appliances. Appliances and entertainment devices are outside the credit, so give them their own lines on the budget and the invoices.

Ask an Accountant Before You Spend. The CRA tells you where the claim goes: line 45355 of the return, with Schedule 12 for the expenses. A professional can confirm the rate for your year and how the claim fits with other credits you use.

Where Costar Fits

Costar's process page describes its role as construction management: one manager coordinates the subcontractors, orders materials and checks completed work against the plans. For this credit, ask your construction manager for the permit application date, the expected inspection date and invoices that carry the items listed above. Costar's project gallery lists a Kitsilano Custom Laneway Home and a Kitsilano Custom Legal Suite at 2762 West 10th Avenue, both with the scope "Permit Application & New Build." Costar does not give tax advice, and whether any project qualifies depends on who lives there and who claims.

Tell us about your project today.

Related on this site: Laneway homes and legal suites · Book a one-hour project consultation

Frequently asked questions

What is the multigenerational home renovation tax credit and does it apply in Vancouver?

The Multigenerational Home Renovation Tax Credit is a refundable federal credit that the Canada Revenue Agency (CRA) describes as covering renovation costs to create a self-contained secondary unit. The unit must let a senior, or an adult who is eligible for the disability tax credit, live with a qualifying relative. It applies in Vancouver and every other Canadian city, because it is claimed on the federal income tax return at line 45355.

How much can a Vancouver family claim for a laneway home built for a parent?

On the CRA's page for the 2025 tax year, the credit is 14.5% of qualifying costs, with costs capped at $50,000 for each qualifying renovation. The most a family can claim is $7,250 for one completed renovation. A family that spends $30,000 on qualifying costs claims $4,350, and a family that spends $70,000 still claims on $50,000. Check the CRA page for the tax year in which your renovation is completed.

Does a laneway home in Vancouver count as a secondary unit for the tax credit?

A Vancouver laneway home can count as a secondary unit if it has a private entrance, a kitchen, a bathroom and a sleeping area, and meets local requirements, permits, codes and by-laws. The CRA says the unit does not need to be part of the existing house, as long as it sits on the same land as the home. The CRA lists permits among the local requirements the unit must meet.

Who counts as a qualifying individual for a unit built on a Vancouver lot?

A qualifying individual is a person who is 65 or older at the end of the tax year of the renovation period, or an adult from 18 to 64 who is eligible for the disability tax credit. The unit must let that person live with a qualifying relation, who is 18 or older and is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual.

Can an unrelated caregiver live in the unit and still qualify for the credit?

No. The CRA's own example describes an adult with a disability who finished a basement into an apartment for a live-in caregiver who was not a relative. The CRA says that renovation cannot be claimed under this credit, because the unit must let the qualifying individual live with a qualifying relation. Both the qualifying individual and a qualifying relation must live in the renovated home.

Which costs does the CRA allow for a suite or laneway home built in Vancouver?

The CRA allows reasonable costs made after December 31, 2023 that are directly attributable to the qualifying renovation, including work by electricians, plumbers, carpenters and architects, permits, and equipment rentals. Costs that do not count include household appliances, electronic home-entertainment devices, routine maintenance, financing costs, costs without receipts, and costs that were reimbursed. If you do the work yourself, materials count but the value of your labour does not.

Can brothers and sisters share the cost of a unit for a parent and each claim the credit?

Yes, when each person who claims is an eligible individual and claims only the costs they paid. The CRA caps the combined claim at $50,000 of costs for one renovation, and the family agrees how to split it. A sibling who neither owns nor lives in the renovated home cannot claim. The CRA's example shows a brother who paid $10,000 but owned and lived in a separate house, so he could not claim that amount.

Which tax year do I claim the credit in for a laneway home built in Vancouver?

You claim it for the tax year in which the renovation period ends, even if the work took more than one year. The CRA says the period begins with the first qualifying cost, for example a building permit application, and ends when the renovation is completed, for example when it passes its final inspection. A final inspection passed in December goes on that year's return, and one passed in January goes on the next.

Can I claim the credit again if a relative already claimed it for the same parent?

No. The CRA allows only one claim for each qualifying individual during that person's lifetime. Its example describes a grandmother whose son claimed the credit on his 2025 return for a unit in his house. A grandson who renovated his own house for her in 2026 could not claim, because the credit had already been used for her. Families should decide which household claims before work starts.

What records do I keep to claim the credit for a Vancouver laneway home?

The CRA says your documents must identify the vendor or contractor with its business address and GST/HST number if any, describe the goods or work with dates and the address of the work, and show the amount of each invoice. Invoices must show payment in full, or come with proof of payment such as a credit card slip or a cancelled cheque. Costs without receipts do not count.

Sources

Multigenerational home renovation tax credit (MHRTC), line 45355 (tax year 2025, page dated January 20, 2026) Canada Revenue Agency, October 17, 2026
MHRTC: Who can claim (page dated January 20, 2026) Canada Revenue Agency, October 17, 2026
MHRTC: Expenses you can claim (page dated January 20, 2026) Canada Revenue Agency, October 17, 2026
MHRTC: How to claim (page dated January 20, 2026) Canada Revenue Agency, October 17, 2026
Disability tax credit (DTC) Canada Revenue Agency, October 17, 2026

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October 9, 2026

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The Multigenerational Home Renovation Tax Credit: What a Vancouver Laneway Home or Suite for a Parent Can Claim

What the Credit Pays

Who Has to Live in the Home

What Counts as a Secondary Unit

What Costs Count

The Dates That Set the Tax Year

Keep the Paper

Six Planning Steps

Where Costar Fits

Frequently asked questions

What is the multigenerational home renovation tax credit and does it apply in Vancouver?

How much can a Vancouver family claim for a laneway home built for a parent?

Does a laneway home in Vancouver count as a secondary unit for the tax credit?

Who counts as a qualifying individual for a unit built on a Vancouver lot?

Can an unrelated caregiver live in the unit and still qualify for the credit?

Which costs does the CRA allow for a suite or laneway home built in Vancouver?

Can brothers and sisters share the cost of a unit for a parent and each claim the credit?

Which tax year do I claim the credit in for a laneway home built in Vancouver?

Can I claim the credit again if a relative already claimed it for the same parent?

What records do I keep to claim the credit for a Vancouver laneway home?

Sources

Designing a Vancouver Laneway Home for a Parent, a Grown Child or a Tenant

Laneway Homes in Vancouver: What the R1-1 Rules Allow Behind Your House

Servicing a Vancouver Laneway Home: Water, Sewer and the Shared Electrical Panel

Create your dream home. Tell us about your project today.

What the Credit Pays

Who Has to Live in the Home

What Counts as a Secondary Unit

What Costs Count

The Dates That Set the Tax Year

Keep the Paper

Six Planning Steps

Where Costar Fits