Buying a multigenerational home
Published on July 5, 2022
The news in Quebec these last few years has brought to light the isolation caused by the pandemic and the broader phenomenon of an aging population. In response to these new realities, many have sought to get closer to family and to centre their lifestyle around community and mutual help. At the same time, looking for a property has been more difficult and more expensive due to recent real estate trends, making the idea of sharing a mortgage very appealing. It’s not surprising, therefore, that multigenerational homes, which have long been part of the Quebec real estate landscape, continue to draw interest.
In these homes, which are sometimes also called bigenerational homes or intergenerational homes, there are two and sometimes even three generations of the same family living side-by-side. In this property model, each family unit has its separate dwelling, with private outside access, but they all live near one another and share some living space. The large portion of the home is usually occupied by the main dwelling, while the secondary dwelling is either totally independent or has an indoor connection to the main portion.
For those wanting to buy a house this year, here are the pros and cons of owning a multigenerational home.
The market for multigenerational homes
Multigenerational homes only account for 1.5% of properties available on the market.1 As for selling times, they tend to take an average of 30 days more to sell than single-family homes.2 This is because there is less demand for this type of property, which appeals to a more niche clientele. Multigenerational homes generally sell for 36% more than single-family homes3 since they offer an average of 500 extra square feet of living space (over 1,900 ft2 vs. about 1,400).4
- The pros of a multigenerational home
- The cons of a multigenerational home
- Is a multigenerational home right for you?
While multigenerational homes only account for a fraction of the Quebec market, there are a lot of benefits to choosing this type of property. Overview:
Living as an extended family
“The love of a family is the centre of gravity and brilliance of everything,” said Victor Hugo. This love becomes the centrepiece in a multigenerational home. When grandparents, parents and children live together on a single lot, the relationships between the generations can grow deeper, and mutual assistance flourishes. And, when Grandma and Grandpa can babysit, it gives parents a break and lets them enjoy regular date nights. And seniors who are losing autonomy can still contribute in different ways to family life when they are under the same roof. Everyone’s needs are met.
Living together also means savings! In the current sellers’ market, it can be difficult to access property. Buying one home instead of two saves a substantial amount on mortgage loans, rental costs (if one family unit was renting before) and on the cost of a seniors’ home if there are seniors living in the multigenerational home. Plus, when there are several people living under one roof, you can get economies of scale on groceries and other goods purchased in bulk.
Getting financial assistance
While the provincial and federal governments do not directly offer specific aid programs for multigenerational homes, it is possible to benefit from related programs for renovations or for seniors and caregivers.
Tax credit for home-support services for seniors: If a child is lodging a person over 70 (60 if living with a disability), there are several tax credits on offer. Find out what’s available in terms of Canadian and Quebec government programs.
Home renovations tax credit and refunds: Is your municipality participating in the Rénovation Québec program? (NB: linked information in French only.) You may be eligible for financial assistance to add a dwelling to your home. And, if at least 90 % of the whole or a portion of the building has been removed or replaced in the renovations there is a Revenu Québec program that may help you recover part of the provincial (TVQ) and federal (GST) taxes paid for materials and services. Learn about all the grants available to renovate your home and ask the municipality in question about what financial assistance is available for renovations.
Before launching your renovation project, it’s wise to find out what the regulations are for your specific city and neighbourhood. Some municipalities, like Saguenay, Alma and Roberval, have updated their bylaws and taxation to offer more financial advantages to owners of multigenerational homes. Others, like Montréal and Longueuil, have development constraints for their specific territory.
While purchasing a bigenerational home definitely has its share of benefits, the other side of the coin may dampen the enthusiasm of some. It’s ultimately best to make sure what you’re getting into before embarking on this project.
Cost greater than for a single-family home
The appeal of a multigenerational home comes with a cost. The median selling price on DuProprio.com for this type of property was $502,500 between April 1, 2021, and March 31, 2022.5 While this is often less than buying two separate homes, the higher price may take some by surprise.
More complex family management
The main objection to buying a multigenerational home is the fear of lacking privacy. Even though every family unit has its own space, you must be ready to live closely with the family, be it your own or your spouse’s.
The grandparents' loss of autonomy should also be considered before making such a purchase. How will their eventual loss of cognitive or physical abilities impact the whole family? Even though at first, young children will be the focus of attention, later on, it is the grandparents who will need more help.
Facing potential tax ambiguities
Buying a multigenerational home can trigger some tax questions between the parties involved. Who is the renter: the parents or the grandparents? Who is the homeowner? What happens if one of the groups moves? These are points that should be clarified before deciding to buy.
Capital gains tax exemption
Selling a multigenerational home does not automatically entitle the seller to a tax exemption on the capital gains from the transaction. If one of the family groups is the owner and the other rents, the rental portion could be considered a revenue property, which would make the capital gains taxable. It is therefore recommended that the parents and grandparents own the home together to avoid this drawback.
Setting aside the pros and cons of buying a multigenerational home, the bottom-line question is this: is this the right real estate project for you? If this is something you feel drawn to, here are our tips to make the project a success for the whole family.
Ask yourself the right questions
For extended family living to work, you have to be able to project yourself into the future and get answers now to some key questions about intergenerational living.
How are family relationships? Between your partner and you? In your parents’ marriage? Between your partner and your parents? Tense or conflictual relationships could have a negative impact on the day-to-day life of the whole family.
What type of space do you need? How many separate spaces are needed and what is the ratio to shared spaces? Do you want the two dwellings to be completely independent?
How will the home be divided for tax purposes? Will everyone own the property? If so, what percentage will each group own? Will there be a rental portion (with the possible tax impacts this implies)?
Thinking about these issues will help you determine whether multigenerational living meets your needs.
Setting cohabitation rules
Before moving into a multigenerational home, first have a talk about everyone’s expectations, the pace of life they want to lead and their vision of communal living. Then set cohabitation rules for sharing housework, schedules, noise management, sharing of expenses, freedom of movement in common vs. private areas, etc. Communal living--even as a family--needs rules to better avoid conflict.
A multigenerational home isn’t for everyone. But when the generations get along and when you prepare for the reality of living close together, the experience can create lasting memories and stronger relationships. Think about it!