An ADU, or accessory dwelling unit, is the perfect addition for anyone looking to add a rental unit to their property, provide an adult child with their own space, or simply have extra space for hosting guests. Before you break soil and start building, there are many things to consider in order to make an informed decision about building an ADU that suits your needs and financial situation.
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What Counts As An ADU?
Any structure consisting of a self-contained dwelling unit that is physically detached, attached, and/or within the principal dwelling on a lot that already contains a house is defined as an ADU. It can be a prefabricated model, a park model trailer, or a unit you build yourself. It also includes a secondary suite built onto the existing main home, or a converted area like a garage or basement. To comply with the guidelines across Canada, it cannot be the primary residence of the property owner and must meet local regulations and building codes.
Home Suite Home: Before You Build
Before an ADU is established on your property, you must check with local bylaws and building codes to ensure that another dwelling can safely be built on your land, and what is required by you or the builders to include. Some bylaw offices require all ADUs to have a kitchen, some regulate the plumbing and electrical hookups, and there are also restrictions on square footage and building height. These regulations vary not only from province to province but also from counties and municipalities as well.
Additionally, it is important that you confirm your suite satisfies all fire and safety regulations, such as having smoke detectors, egress windows, carbon monoxide detectors, and a fire separation between the main house and the suite. The ADU will also have to be inspected and granted permits. This includes building permits, electrical permits, plumbing permits, and fire and safety inspections. You may also need an occupancy permit before renting out your secondary suite.
Financing and Grants
When looking at ways to finance your ADU, consider looking at more than just taking out loans or lines of credit. Depending on your location and your municipality, there are several grants and tax breaks you can apply for when adding an ADU to your property.
Financial incentives are frequently provided by provincial and municipal governments to homeowners who build secondary suites. The purpose of these incentives is to enhance the availability of reasonably priced housing and make already-existing dwellings more livable. Homeowners may occasionally qualify for grants or forgivable loans to assist with the expense of construction. One such government plan is the Ontario Renovates Supplementary Suites Forgiven Loan program, which offers homeowners forgivable loans of up to $75,000 to build or renovate supplementary suites in their homes.
Homeowners who add supplementary suites to their properties might also receive tax savings. For instance, the Multigenerational Home Tax Credit is a federal government program that offers a non-refundable tax credit of up to $2,000 for qualified costs spent on conversions made to make a home or ADU more accessible for older or disabled family members.
Paying Your Fees
Adding another unit isn’t tax-free. There are taxes associated with having an extra dwelling unit (ADU) on a piece of property. The amount is determined by the ADU’s evaluated worth. Naturally, the size, kind, quality, and finishes of the ADUs all affect this value. Before building, you need to consider how the increase in yearly taxes will affect your budget, and if it still remains reasonable to start building.
Are you looking to enter the real estate market this spring? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!
