In our city (Calgary), the debate over secondary suites is raging. Our new mayor is a huge proponent of secondary suites and wants to legalize them across the city providing they meet various safety and building codes. He believes that this would help increase the amount of affordable housing in our city and help reduce homelessness. However, it’s a very contentious issue and many Calgarians are vehemently opposed to his plan. At the same time, Kristen and I have been debating whether or not we should turn our basement into a secondary suite.
Benefits of the Basement Suite Conversion
One of the biggest reasons we’re interested in converting our basement into a suite is that Calgary is currently offering a grant for the development of legal secondary suites. The grant is covers up to 70% of the renovation costs up to a maximum of $25,000. That’s A LOT of free money. Our basement is not developed at the moment so this renovation would add significant value to our house. Once the suite is rented out, we figure we’d probably collect between $700 and $850 per month in rent, which would do a lot to offset our mortgage payments.
There are also significant tax benefits to a basement suite. I think we’d be able to deduct renovation costs from our taxes as well as a portion of our mortgage payments (based on the ratio of floor space in the basement suite to total livable space in the entire house).
I have a few friends who have live-in nannies for their kids instead of using daycare. I don’t know if I’m completely sold on the live-in nanny idea, but if we do go down that road in the future, we’d be totally set up for that.
Drawbacks of the Basement Suite Conversion
Of course, all of the tremendous financial benefits are tempered by a number of serious drawbacks. For one, we would lose access to our basement for a long period of time. The city’s grant program requires you to rent out your basement for a minimum period of 5 years. That’s a long time. If we move or decide we need our basement, we would need to pay back a portion of the grant money.
Another big drawback is that we’d have someone living under us. We would take measures to soundproof between the primary and secondary units, but inevitably some sound will probably still transmit through our floors. I would worry about disturbing our tenant and being disturbed by our tenant. Furthermore, what if the tenant ends up being a jerk or they don’t pay on time or they cause damage to our basement? Evicting a tenant sounds like a terrible and costly process.
Under the city’s rules, we would also have to give our tenant a space to park in our garage. That’s not a huge problem for us because we only have one car and we have a huge 3 car garage but even so, we would loose quite a bit of space that we’re currently using as workshop space and storage.
The rules for developing a legal basement suite are fairly stringent. For one, the basement suite needs separate heating and ventilation. Another big one that I’ve noticed is that the electrical panel needs to be located in a common area. Currently it’s in our basement so we’d have to have it moved somewhere else. That might be very tricky and/or expensive. Finally, the building permit process in Calgary can be very complicated and time consuming and jumping through those hoops does not appeal to me in the least.
Renting out a basement suite can provide a significant amount of additional income, especially in a city such as Calgary where the cost of housing is quite high. The city of Calgary’s secondary suite grant program makes the basement suite a slam dunk from a financial standpoint. However, there are a number of huge drawbacks to renting out a basement suite. Having someone live in my basement isn’t something that I really want.
So there it is. I’m not sure what we’re going to do with our basement, but we’re sure giving it a lot of thought.
If you or someone you know has any experience with renovating and/or renting out a basement suite, let us know in the comments. Was it a good or bad experience?