Nova Scotia's Secondary Suite Incentive Program: What Happened to the $40,000 Forgivable Loan?

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May 25, 2026

What the Program Was

The Nova Scotia Secondary and Backyard Suite Incentive Program launched in October 2023, initially offering forgivable loans of up to $25,000 — later increased to $40,000 in April 2024 — to homeowners who built qualifying secondary or backyard suites on their principal residence. View the provincial program page (archived).

A forgivable loan means the money does not need to be repaid, provided the homeowner meets ongoing conditions. The loan was forgiven at a rate of 20% per year over a five-year term — if you met all requirements for five years, the full amount was forgiven.

How the Program Worked

The program funded up to 50% of eligible project costs, to a maximum of $40,000. Eligible costs included construction materials, labour, permits, and the purchase of a prefabricated backyard suite. Applicants had to:

Be the registered owner(s) of the property
Live on the property as their primary residence
Have up-to-date property taxes
Be a Nova Scotia resident (Canadian citizen or permanent resident)
Have funds available to pay for construction upfront (the loan was reimbursement-based, paid after an occupancy permit was issued)

Who Could Live in the Suite?

To have the loan forgiven, the tenant and homeowner had to meet one of these conditions:

The tenant is a family member aged 65 or older, or a person living with a disability (supportive housing stream)
The homeowner is aged 65 or older, or a person living with a disability, and rents to a family member
The tenant is an individual or household below provincial income limits, renting at no more than 80% of average market rent (affordable housing stream)

In April 2024, the program was expanded to include a wider range of family members: grandchildren, siblings, aunts, uncles, nieces, and nephews.

The Rent Caps in Practice

In Halifax under the affordable housing stream, eligible tenants could not have a household income exceeding $47,000 for a one-bedroom unit or $67,500 for a three-bedroom. The maximum rent was capped at 80% of average market rent — roughly $724–$1,334/month. This created a real tension: building a two-bedroom backyard suite costs $150,000–$250,000+, and renting it at capped rates made the ROI marginal without the forgivable loan.

Program Uptake and Limitations

By April 2024, the province had approved 25 forgivable loans despite receiving more than 500 inquiries. Many clients of local builders like JonesCo Builders — which had completed about a dozen backyard suites in the Halifax area — already had funds available and didn't rely on the forgivable loan. For families trying to build accessible housing for relatives with disabilities, however, the program was genuinely meaningful.

Why the Program Ended

The provincial Secondary and Backyard Suite Incentive Program ended in May 2026. A Nova Scotia couple planning to build a backyard suite on their rural property told CBC the project became significantly harder without the program. The Canadian Home Builders' Association Nova Scotia expressed concern: "For many homeowners, the financial support made these projects feasible. Without it, fewer secondary suites may move forward, which will directly impact supply." The loss was particularly difficult for people with disabilities preparing to move back into the community from institutional settings — a transition prompted by a 2021 court ruling on systemic discrimination.

What Replaced It? The HRM Secondary Units Incentive Program

Within Halifax Regional Municipality, a separate program exists: the Secondary Units Incentive Program, funded through the federal Housing Accelerator Fund. This is a non-repayable grant (not a loan — no repayment required) for homeowners building new backyard suites or secondary suites. As of February 2026, the program was expanded to include non-profits and housing co-ops, with two units per dwelling now eligible. The application deadline is October 11, 2026, and construction must be completed by April 1, 2027. Visit Halifax's Secondary Unit Incentive page to apply.

This program covers homeowners within HRM only. Homeowners outside HRM do not currently have access to an equivalent provincial program.

Other Current Incentives and Financing Options

Federal GST/HST Relief

The federal government has removed the 5% GST on qualifying new purpose-built rental housing, and Nova Scotia has eliminated the 10% provincial portion of the HST on new apartment projects. These reliefs apply to backyard suites built as rental units.

Multigenerational Home Tax Credit

If you're building a suite for an eligible family member, the federal Multigenerational Home Tax Credit offers a non-refundable credit of up to $2,000 for eligible renovation expenses.

CMHC MLI Select Financing

CMHC's MLI Select program provides preferential financing terms for qualifying purpose-built rental properties, including those with accessory dwelling units. Favorable interest rates and extended amortization periods can significantly improve a backyard suite project's cash flow.

What This Means for Your Project

If you were counting on the provincial $40,000 forgivable loan, it's important to revise your numbers. The HRM municipal grant remains available for Halifax homeowners, and the GST/HST relief and CMHC financing options remain valuable tools. The economics of building a backyard suite in Halifax still work for most homeowners with eligible properties — strong rental demand, rising rents, property value appreciation, and available municipal grants mean the return profile remains attractive.

Get Help Planning Your Backyard Suite Project

Halifax General Contractors helps homeowners navigate both the financial and regulatory landscape for backyard suites. Visit our Backyard Suite Builder page, use our Cost Calculator, or explore our Home Additions in Nova Scotia and Aging in Place in Nova Scotia pages. To start your project, request a free quote.