Whether you call it a granny flat or an in-law suite, more and more homeowners are choosing to create an additional dwelling space in their home for their parents to live in. In-law suites — also even more facetiously referred to as mother-in-law suites — are an ideal solution if you want to keep your loved ones close but still want to keep some semblance of privacy. Adding a self-contained living space — also called an accessory dwelling unit — can even add to the resale value of your home and make it more appealing to potential buyers.

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If you've been toying with the idea of constructing an in-law suite, you've almost certainly wondered how much it will set you back. Here’s what you need to know.

How Much Does an In-Law Suite Cost?

The costs of building an in-law suite vary widely depending on where you live and how ambitious your plans are. An in-law suite costs between $40,000 and $125,000 (CAD 54,000 and CAD 169,000), according to data from Realtor.com, with prices increasing depending on the structure's size.

A key deciding factor on the cost of your project is whether you decide to construct or repurpose a separate building like a garage or build the in-law suite within your main residence.

One of the most affordable options is to repurpose your basement, costing $12,000 to $33,000 (CAD 16,000 to CAD 45,000) on average.

You should expect to spend around $20,000 to $50,000 (CAD 27,000 to CAD 68,000) to convert a garage. Adding a bathroom to a converted garage usually costs an extra $15,000 to $25,000 (CAD 20,000 to CAD 34,000).

Alternatively, you could build an addition to your existing home, which usually costs between $20,000 and $72,000 (CAD 27,000 and CAD 97,000). Building a separate living unit from scratch is the most expensive option, with many homeowners spending up to $125,000 (CAD 169,000).

Does an In-Law Suite Add Value?

Estimating how much value an in-law suite will add to your home can be challenging because there may not be enough similar properties with in-law suites on the market to make a price comparison.

Whether your in-law suite significantly impacts your home's value depends on how much privacy it affords, whether it has its own entrance and whether it offers desirable facilities such as a kitchen, bathroom and reception room. In other words, in-law suites add more value if you can legally rent them out. In this situation, HomeLight says you could expect to add around 7.2% to 9.8% to the market value of a $400,000 (CAD 540,000) home by building an in-law suite.

How much value an in-law suite adds to your home also depends on where you live. If you live in an area that restricts the rental of in-law units to relatives, it is likely to add less value than if prospective buyers can rent it out to gain a second income. However, properties with in-law suites may hold more appeal to buyers since the COVID-19 pandemic as they offer flexibility for employees working from home. In-law suites also tend to add more value in fast-moving property markets.

What Is the Average Size of an In-Law Suite?

In-law suites range from 300 to 1,000 square feet. To be considered an accessory dwelling unit, your suite will need to have its own entrance and bathing and cooking facilities. ADUs typically add more value to your home than a repurposed room with an en suite, so it may be worth building a larger unit. This will also allow residents more privacy.

However, you should check restrictions in your city or municipality before you start planning your project. Some areas restrict the permitted size of accessory dwelling units, and you'll be refused planning permission for any structure exceeding the local limit.

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How Much Value Does a Garage Apartment Add to a House?

A garage apartment is likely to add more value to your home than a basement or attic conversion because it has its own entrance and affords significantly more privacy. In areas where it's legal to rent out an accessory dwelling unit, this offers prospective buyers the benefit of making some extra income by renting it as a living space or bed and breakfast apartment.

In general, you can expect a garage apartment to add up to 9.8% to a $400,000 (CAD 540,000) home's value, especially if it's detached. But again: This figure is less realistic if you live somewhere where it's illegal to rent ADUs to non-relatives or where there is little demand for in-law suites. If you live in an area popular with vacationers, however, an in-law suite could be a major selling point to buyers wanting to make money from short-term lets and could significantly increase the asking price.

While there are no figures available for how much value a garage apartment adds on average, Gambrick Construction says a detached garage generally adds around 0.25% to 0.5% of value per square foot compared to the value of the main residence. For many people, increasing their home value is secondary to the practical necessity of having a second dwelling space. However, if adding value is a major priority, you should do your research by comparing similar properties in your area and aim to spend less on the build than the projected value increase.

All CAD conversions are based on the exchange rate on the date of publication.