How will building an ADU affect my taxes and property value?

Adding an ADU will likely affect your property taxes and the resale value of your home. However, your primary house will not be reassessed, and your property taxes will only increase based on the added value of your ADU. For example, if you build an ADU that adds $150,000 to your property value, and your tax rate is 1%, your taxes will increase by 1% x $150,000, or $1,500 per year.

Building a JADU will have a significantly smaller impact on assessed value. In some cases, your taxes will not increase at all. Home sharing will also not increase the assessed value of your home. Generally, garage conversions will not raise your tax bill as much as new construction, but they will also not add as much value.

Check out our blog post on the subject to learn more. You can also watch this helpful 4 minute video from ADU company Maxable on property tax implications!

Each property will require a one-on-one analysis to determine the added value of an ADU, so contact your County’s Assessor Office once you have an idea of your plan. They will be able to provide you with a rough estimate of tax implications.

Adding an ADU may impact your income taxes as well. This can be rather complicated, and it’s best to discuss these with a tax advisor.