Property tax increase when building an ADU in Berkeley, CA
New Avenue built an accessory dwelling for a client in Berkeley. The client wanted to add an ADU with a guest room, a half bath, a sitting room, and a utility nook with laundry facilities and a sink. The 346-square-foot accessory building also features a storage loft.
With over 750 projects in our portfolio, we’ve come to understand that most old homes such as this one (built in 1920) need four major changes to bring them up to date. These include a new master suite, an open kitchen/living area, sustainability updates, and an accessory dwelling.
For this project, the homeowner chose not to add a kitchen. That makes this ADU best for family and personal use.
Above, left: plan for the upper-level storage area.
Above, right: plan for the first floor.
How much do property taxes go up when you add an accessory dwelling in Berkeley?
A small accessory building like this one costs around $208,000 for design, permitting, all site work/engineering, and construction. When adding a backyard cottage or in-law suite of this size in Berkeley, you can expect to see a tax increase equal to about one-half of one percent of the full cost of the project. In this case, the tax increase came to $1,034. The main home is not reassessed when an ADU is added.
That tax increase is negligible when you consider the value the homeowner gets. If he chooses to use the building for family or friends, the amount saved on housing or lodging will easily cover the tax increase. If he uses it for himself, he’ll still come out ahead compared to moving to a larger home in the area.
If he chooses to add a kitchen in the future, the ADU will easily rent for $2,000 per month or more, paying for itself and the tax increase. The rent money will also be available for the homeowner to use for his main home, education, travel or anything else he may want.
Our recommendations for ADU size
We always recommend building as big as possible when adding an accessory dwelling. A quality ADU of 800 to 1000 square feet with an all-electric, net-zero energy standard will cost around $500,000. That includes every aspect of the project: custom design, engineering, permits, red tape, all site work, and construction. Larger ADUs rent for more, so the additional cost is not an issue for most homeowners. A two-bedroom unit can rent for $3,300 per month, and a three-bedroom home will rent for $4,500 per month.
The best way to transform your home
New Avenue takes care of it all. We provide a full-service design/build solution for homeowners who want to bring their properties up to date and in line with their lives. We create all-electric, net-zero energy custom homes, ADUs, family compounds, and whole-house remodels that serve their owners for generations. Take a look at our portfolio and then contact us to discuss your goals. We’ll answer all your questions and introduce you to the design/build team that’s ideal for your remodel or custom build.
