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Interior Living Room of a Small In-Law Suite

Your Guide to Building an In-Law Suite

Need additional space in your home to take in a relative long term? Whether you have an extra room on the first floor of your house or space in your backyard for a guest house, adding an in-law suite might be the perfect solution for you! Check out this guide to everything you need to know about in-law suites.

What Is an In-Law Suite?

An in-law suite is a private living space for parents, in-laws, or other relatives that’s either attached or located on the same property as a single-family home. This space typically serves as multigenerational housing, which is why you’ll hear it referred to as a granny flat, granny pod, or mother-in-law suite. In addition to having a bedroom and bathroom, in-law suites can be personalized to fit the needs of your relatives like having accessible entryways or a kitchenette.

Different Kinds of In-Law Suites

While they’re most often used for relatives, in-law suite homes can serve other purposes as well. Creating an in-law suite in advance not only lets you be ready for when relatives move in, but it also gives you opportunities for multi-purpose use in the meantime.

Mother-In-Law Suite

The most common use of an in-law suite is a space in your house for your in-laws or parents so they’re close by. Great in-law suite features to consider might include an accessible ramp, walk-in shower, and non-slip flooring. Accessibility is key in order to keep the home practical as your in-laws or parents age.

Guest House

A guest house is great for when friends or family come to visit. They won’t have to worry about booking a hotel and can still have their own space to relax. Placing hotel accommodations like a smart TV, mini-bar, and plenty of soft towels in the guest house can help create a luxurious getaway space for your guests.

Nanny Quarters

Live-in nannies are a convenient solution for many families, especially as more people work from home. Using your extra living space as nanny quarters eliminates commute time, and if there’s ever an emergency, you have someone able to lend a hand at a moment’s notice. While you’ll still need to provide your nanny with a stipend, your costs will be lower since you’re providing their room and board. Keep your nanny comfortable with amenities like in-unit washer and dryer and a personal kitchen.

Temporary Rental

Another way you can use an in-law suite is for Airbnb hosting. There are many requirements for an accessory dwelling unit (ADU) that you need to follow in order to qualify for renting, including providing amenities separate from the primary dwelling unit:

  • Entrance/exit
  • Sleeping area
  • Kitchen with cabinets, countertop, sink with running water, and a stove or stove hookup
  • Bathroom facilities with a bathing area

The ADU rental can be attached or detached from the primary dwelling space, as long as it follows the above requirements. If your ADU unit qualifies, renting it out to Airbnb guests is a great way to make extra income. Renting out your secondary suite can also be a way to pay off building costs.

College Crash Pad

Have kids in college? A dwelling unit can house students during breaks so you can spend time with them while still providing them with the independence they have at school. They might appreciate features like private WiFi for streaming and gaming, a pull-out couch for friends staying the night, or storage for items they don’t have space for in their dorm room.

Hosting Space

Using your mother-in-law house as a hosting space can take a lot of stress out of party planning. This area is perfect for hosting a homegating party for the next big game or a dinner party! Instead of having to prepare your main home, you can focus on just cleaning the in-law suite before and after your event. Amenities like nice dishware, extra seating, and bright lighting can take this venue to the next level.


Create a she-shed out of your granny suite for the perfect place to escape and relax, exercise, or explore hobbies. She-shed ideas include an art studio, greenhouse, yoga studio, and more. Find she-shed design and organization tips to make this extra living space uniquely your own.

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Benefits of an In-Law Suite

Whether you want to keep your family close to your home or are looking for potential tax credits, there are many benefits to having an ADU.

Keeps Your Guests Close

A house with a mother-in-law suite allows you to house your older relatives close to you, making it easier to take care of them as they age. This proximity gives you endless opportunities to spend quality time with your loved ones while still respecting their independence.

Adds Value to Your Home

Building an in-law suite as a home addition can yield a great return if you choose to sell the house. The appraised value of homes with mother-in-law suites that are legally able to be rented out can be 7.2%-9.8% higher than their most recent sales price. Not only can extra square footage result in a higher listing price for your home, but buyers who have large families or want a space to rent out are likely to pay more for your home with an in-law apartment.

Qualifies for Tax Benefits

There may be tax credits for having an ADU or in-law suite. For instance, if you’re paying for more than half of your relative’s support, you may be able to claim them as a dependent. You may also qualify for a home office tax deduction if that’s the in-law suite’s primary use. If you rent out the space, you’ll have to pay taxes on rental income, but you could receive tax deductions on utilities, repairs, mortgage interest, depreciation, insurance premiums, and more. Landlords of ADUs may also qualify for the pass-through tax deduction, where you could deduct 20% of your net rental income.

Saves You Money

Having a private suite is a great way to turn your house into a multigenerational home or offset the cost of long-term care. For example, you can save money on dorm room and board costs with your college student living at home. It can also be cheaper than paying for relatives to live in a nursing home, as assisted living costs can easily reach over $100,000 each year.

Drawbacks of an In-Law Suite

Small Bungalow with Extra Room Built Behind the Home. Photo by Instagram user @caplenergroup

Photo via @caplenergroup

While there are excellent benefits to having an in-law suite attached to your home, there’s still a lot to consider before building an in-law suite, as there are several downsides to maintaining this residence, too.

Less Privacy

Regardless if family members or strangers are occupying your attached or detached mother-in-law suite, you will have less privacy than you did before. This amenity is a lifestyle change, as someone’s likely to be home at all times—which means if you work from home or value alone time, you may never feel truly alone. While this effect may be lessened by having a separate entrance or building a separate addition entirely, it might be more difficult for you to adjust to this living arrangement.

Costly Upkeep

Just like how your house costs money to own and maintain, there will also be a cost to own and keep your mother-in-law suite in livable condition. Be prepared for additional monthly costs like utilities, WiFi, cable and streaming services, and potential cleaning services. You should also save for unexpected repairs due to weather, pests, and general wear-and-tear. You’ll have to anticipate additional costs of cohabiting as well, including groceries, utilities, or other necessities. These recurring costs can add up quickly if you’re not prepared for them.

Complex Building Process

There are many factors to be aware of when creating an in-law suite, and poor planning can become a breeding ground for mistakes. Whether you’re hiring someone or doing the work yourself, mistakes—like getting the incorrect permit or forgetting a necessary in-law suite feature—could not only set back your construction timeline, but it could also cost you more money and stress in the long run.

Weighing the Cost of an In-Law Suite

Full In-Law Suite Built in Home's Backyard. Photo by Instagram user @greenstatepro

Photo via @greenstatepro

Are you worried about the resale value of your home or a potential increase in property taxes when you build an ADU? While the cost to build a mother-in-law suite can seem overwhelming, it’s important to compare it to the long-term value and benefits this feature can offer.

How to Finance an In-Law Suite

There are options for financing an in-law suite like low-interest loans, home improvement grants, equipment loans, grants for veterans, or help from Medicaid for medical accommodations. You may also consider loans like a Home Equity Line of Credit, Home Equity Loan, construction loan, or a cash-out refinance. Another idea to finance an in-law suite is to see if your community has any non-profit organizations or charities that provide volunteer labor to help seniors with home improvements.

What Are the Initial Costs?

The upfront cost of building a mother-in-law house could be anywhere from $40,000 to $125,000, depending on size, features, and location. However, a garage converted into a mother-in-law-suite could be a more affordable route, costing around $20,000 to $45,000. You can adjust your plans and in-law suite cost to fit your budget, like gradually building or converting the space, or save labor costs if you’re handy enough to do some parts of the project yourself like painting and decorating!

What About Property Taxes?

If you’re adding square footage to your property with an in-law suite addition or doing home improvements (like converting an existing space), you can expect a property tax increase. This aspect of building an in-law suite is especially important, as some in-law suites could reclassify your single-family home as a duplex, which can result in higher property taxes. However, duplex qualifications may depend on the area, so having a separate entrance to an attached in-law suite can be a duplex in some cities but not others.

Will Homeowners Insurance Premiums Increase?

Since you’re increasing the value of your home with an improvement or addition, the cost to insure your property will likely increase. If your in-law apartment is separate from your house, you may need additional coverage, as most homeowners insurance policies only offer up to 10% of your main dwelling coverage for other structures on your property. In the case your guests live in a converted space within your house, your homeowners insurance should adequately cover their belongings. You should still check with your insurance agent to make sure you have appropriate coverage. If you rent out your in-law suite, you may also need landlord insurance. It’s a good idea to require tenants to have renters insurance as well.

Does It Need Separate Utilities?

Consider separating your mother-in-law suite utilities from the main house if you will be renting the space out. That way, you can turn off the utilities for that space in case it’s ever unoccupied. While this allows you to divide bills more easily, adding separate utility meters could add thousands of dollars to your project costs. However, if you’re using the space to house relatives, you may want to have the same utilities, just with different lines.

How to Build an In-Law Suite

Small In-Law Suite Built Behind Home. Photo by Instagram user @adugurus

Photo via @adugurus

Building an in-law suite allows you to customize the space for your unique needs. Lay out a building plan that works for you and schedule out a general timeline of the build. Parts of the building process may occur simultaneously, so stay organized to ensure everything is being completed to the necessary guidelines.

Check Local Laws Before Investing

Adding an ADU will take up physical space on your property, so make sure to check local building codes and zoning laws to ensure you obtain the right permits and include all the legally required features. For example, some counties may not allow you to have a full kitchen in your mother-in-law apartment or rent out the space to non-family members. Visit the zoning office with your lot and block number to find laws and legal suite requirements regarding your property. You may have to petition for a variance or get your neighbor’s signature.

Confirm Your Build with Your HOA

If you have a Homeowners Association (HOA) or other neighborhood association, make sure your plans for a guest house align with their guidelines as well. Your HOA may only allow a certain number of rentals in the neighborhood, so you may have to register for a spot if you rent out your in-law suite. They may also have rules on how many consecutive days guests can stay with or without the owner’s presence.

Determine Your Location

The location of your in-law apartment depends on your space and budget. Fortunately, there’s no one right way to add an in-law suite to your home. Find the option that works for your family by converting an existing basement, attic, garage, or room on the first floor of your house. You could also build a backyard mother-in-law suite or add an extension onto to your home. Keep in mind the in-law suite features you’ll want to include and what will work best for your family member when deciding on your type of ADU housing.

Set a Budget

Make sure to account for fees and requirements in your area when you’re creating a budget. For instance, ADUs larger than 750 square feet may have to pay a development and impact fee. This fee is calculated differently depending on where you live, but it could cost you thousands of dollars. In some states, like California, new ADU builds are required to have solar panels. While this will add expenses to your budget, there’s a 26% federal tax credit for solar panel installation and maintenance costs. As a general safety net, it’s wise to budget an additional 10% to your building costs in case of unforeseen circumstances.

Review In-Law Suite Requirements

If you’re not planning to rent out your in-law suite and don’t need it to also qualify as an ADU, the only requirements are to have a separate bedroom and bathroom for your guests. However, a comfortable in-law apartment should also include a private entrance, living space, and a kitchen or kitchenette.


Need somewhere to store furniture or belongings while building an in-law suite? Extra Space Storage has convenient self storage locations all over the country. Find available storage units near you!

Interior shot of an in-law suite with a white table and chair set.