Wednesday, October 24, 2012

Property Taxes for the ADU

Many people have inquired about how the ADU effected my county property tax. Up till now, I had no idea how the addition would impact it. Even the county's appraiser who inspected the ADU last spring couldn't give me any sense about the impacts of the ADU on my overall taxes.

I finally have an answer: It is raising my taxes a lot! In my case, it's raising my property taxes by $2,422.32. Said another way, it's more than doubling my property taxes (a 2.5X increase to be exact).

Whereas before, the total value of my property's structures (just the main house) previously were $177K; now, with the ADU added to the property, the county is assessing my property's two structures (the main house and the ADU) at $320K. I assume of course that the vast majority of that $142K increase in the county's structural valuation is attributable to the addition of the new ADU.

This doesn't reconcile with what a private appraiser found as the worth of the property with the ADU addition. In fact, this county valuation is over 50% higher than what the appraisal said.

This property tax anecdote should be considered with a grain of salt, as each property has unique attributes and history that would effect how an addition would increase the tax burden. With ADUs being relatively rare, this story can serve as one reliable data point. However, there are many factors than play into property taxes, so I won't speculate as to how this data point compares with other properties that have ADUs.

And, it's important to note that this relatively huge new property tax burden does not hold a candle to the very tangible financial benefits provided monthly or annually by having the ADU.

If ADU Financing is of interest to you, I encourage you to attend the Build Small, Live Large Summit this Friday, October, 26th. I'll be speaking on a panel entitled Financing the Accessory Dwelling Unit.
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