Property tax increase when adding a one-bedroom, one-bathroom ADU with kitchen in Oakland

We built a one-bedroom, one-bathroom ADU with a kitchen in the backyard of an Oakland home. Built in 1929, this home was badly in need of more space. The homeowner chose to add an ADU for his parents to live in, putting them close by and allowing the family to help each other while saving money on housing. The cost range of an accessory dwelling unit project like the one we designed and built in Oakland, a 450-square-foot ADU, tends to be around $300,000 to $400,000, depending on the site and design.

When you add an accessory dwelling, you’ll see a tax increase equal to one-half of one percent of the total project cost. For this type of project, that means a tax increase of $1,500 to $2,000 per year. Considering the amount the family is saving per month on housing for the owner’s parents, this amount of tax increase is no problem. Should the family rent the ADU out in the future, they’ll be able to get $2500 to $3000 per month in rent. That’s enough to pay for the ADU and the tax increase, leaving plenty of rental income left over for the homeowner’s needs.

An important thing to know is that when an ADU is added, the main home is not reassessed when new taxes are calculated. They are only looking at the added value of the ADU itself. And with the increase in property values and rental income (or rental savings if a family member moves in) that an ADU provides, the tax increase isn’t really a financial burden.

At New Avenue, we create custom ADUs to help people live more comfortably, provide housing for loved ones, or bring in rental income that can help pay for other things you want or need.

We provide a turn-key solution for adding accessory dwellings and building custom homes. We handle design, permitting, and construction with transparent pricing. We guarantee we can deliver on budget with a professional standard you can trust.