Income Suites / Basement Apartment

Having an additional source of income is always a good thing, but when deliberating whether or not to purchase a home that has a basement apartment to use as a rental option, there are a few things to consider. The first thing to consider is the additional costs involved. Does having a basement raise the buying price? Here are some additional pros and cons:

Pros

  • Additional Income -- This is always a good thing, especially if you are taking in more than you have to spend.
  • You will have someone watching the home if you are away on travel.
  • You will be providing a place to live for someone.

Cons

  • You will have to report the rental income on your taxes. This may change your tax bracket and cost more than you anticipated.
  • If you have to repair or renovate the basement, it is considered a capital expenditure and will reduce your capital gain when and if you sell.
  • Your energy bills may be higher -- Due to the extra activity in the home, your bill may become higher than the norm.
  • You give up a certain amount of privacy -- If your basement has a separate entrance, you may avoid this inconvenience, but if not, this is a consideration.
  • Noise -- You may be too noisy for your tenant or vice versa.
  • You may be breaking the law.

These are just a few considerations when deciding on whether or not you want to use your new basement as a rental property. Sometimes the thought is nice, but the effort and headache that may accompany the reality may be too much. Think carefully before making this decision. Once you sign the dotted line, it's yours.