Will I have to pay more property taxes if I add an accessory dwelling in Santa Cruz?
New Avenue built an accessory dwelling for a family in Santa Cruz. The clients, John and Kathleen, wanted to add an ADU with a bedroom, a bathroom, a kitchen, a dining area, living area, and garage. The clients wanted to an accessible home for Kathleen’s father.
Having completed over 750 projects, we understand that most homes in California’s historic residential areas need four major changes: a new master suite, an open kitchen/living area, sustainability updates, and an accessory dwelling. The main home, built in 1950, has two bedrooms.
Adding this accessory dwelling is a great move toward bringing this home up to date and making it into a place the homeowners love.
How much do property taxes increase when you add an accessory dwelling in Santa Cruz?
A one-bedroom accessory dwelling like this one costs around $400,000 including design, permitting, all site work/engineering, and construction. When adding a “granny flat” or accessory dwelling of this size in Santa Cruz, you’ll 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 $1,639 after the project was built in 2014. Today, the project would cost around $400,000 and would see a tax increase of approximately $2,000 annually. The main home is not reassessed when an ADU is added.
With the money the family will save on housing and the benefits they’ll enjoy thanks to multigenerational living, the tax increase is negligible. (It breaks down to less than $170 per month.)
If the homeowners choose to rent the ADU out in the future, they’ll be able to bring in $2,000 per month or more. The ADU will easily pay for itself and the tax increase. The rent money will also be available for the homeowner to use for the mortgage on their main home, education, traveling the world, or other expenses.
How large should an accessory dwelling be?
Although you may be limited by your lot size and shape, we suggest building as large an ADU as possible. That’s because more space means more benefits for the lifetime of the ADU (and that’s a really long time.) An ADU that is 800 to 1000 square feet and is all-electric with advanced sustainability will cost around $500,000. Our costs cover everything you need to get your ADU in place: custom design, engineering, permits, red tape, all site work, and construction. Since larger accessory dwellings can bring in more rent money than smaller ones, most homeowners see the benefits of building big. A two-bedroom ADU in California’s high-demand areas will rent for at least $3,300 per month, and a three-bedroom unit will bring in at least 4,500 per month.
Here’s how to get yours.
New Avenue is a turn-key solution for homeowners who want to upgrade, update, and add to their homes. We provide the best design/build solution for custom construction projects. Our all-electric, net-zero energy custom homes, ADUs, family compounds, and whole-house remodels give back to 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.
