*This post was created in collaboration with Alpine Credits
The Canadian government recently announced details about Budget 2022 and the new initiatives to make housing more affordable for Canadians. One of the many programs offered is the Multigenerational Home Renovation Tax Credit, which promises to help provide some financial assistance to households that accommodate more than one generation in a family. Making changes to an existing home to provide more living space for an additional family member can cost thousands of dollars, which may be more than a family can afford.
With the new tax credit, multigenerational households can get a tax break on renovation and construction costs to ease their financial burden. Let’s take a closer look at this tax credit to see how it can help you, and if you qualify.
What Is The Multigenerational Home Renovation Tax Credit?
Many Canadian households include several generations of families, such as grandparents, parents, and children living together in the same home. For many of these families, living under the same roof makes it easier to care for elderly family members, especially those who may have medical or mobility issues.
The federal government proposes to introduce a tax credit under its Budget 2022 that would provide as much as $7,500 to support the construction of a secondary suite for seniors or adults with disabilities.
Beginning in 2023, the Multigenerational tax credit would allow families to claim a 15% tax credit up to $50,000 in qualifying renovation or construction costs associated with building a secondary suite.
Purpose Of The Multigenerational Home Renovation Tax Credit
For people who require some level of care, it can be easier for their families to support them if they all live together in the same home. It also helps to consolidate housing costs to accommodate more than one family, especially given the soaring costs of home prices these days.
But accommodating additional family members from different generations can be challenging, depending on the amount of space in a home. In many cases, renovating a house or adding to it can provide the extra space needed to comfortably house additional family members.
The Multigenerational Home Renovation Tax Credit can provide the added financial assistance many households may need to cover these construction costs.
Eligibility Requirements For the Multigenerational Home Renovation Tax Credit
In order to qualify for this tax credit, the following eligibility criteria must be met:
- You must have a qualifying relationship with the individual (over 65 or disabled) who lives with you.
- You must renovate your current home where you live (not a separate home).
- The construction costs must be considered eligible expenses.
Other Ways To Help Finance Your Multigenerational Home Renovations
If you need extra cash or can’t qualify for the Multigenerational tax credit, you can still fund your renovations in other ways. Particularly, you can use the equity in your home to finance your costs.
If you have equity in your home, you can tap into it and get a home equity loan or line of credit.
You can generally borrow up to 65% to 80% of your home equity. Tapping into your home equity is often a great option as it has low-interest rates and large loan amounts.
Where Can You Get A HELOC Or Line Of Credit?
Many banks and financial institutions offer loans backed by your home equity. However, qualifying can be difficult if your credit score, income or debt levels don’t meet their standards. But that doesn’t mean you can’t get a home equity loan or HELOC due to bad credit or low income.
With alternative lenders like Alpine Credits, approval is based on the equity in your home and not your credit score, income or age.
If you have a senior living at home with you or a family member with a disability, you may need to make some changes to your existing home to accommodate them. To help financially compensate for this cost, you may qualify for the Multigenerational Home Renovation Tax Credit, which can provide you with a few extra thousand dollars to cover the cost of renovating your home.