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Legally Converting Your Basement

Is the cost of owning your house feeling less like a monthly check and more like an arm and a leg?

If so, maybe it’s time to look downstairs. At the basement, that is. By spending a little time looking at rules, regulations, and… yes, renovation plans, you may be able to turn your bottom floor into a basemen suite — and bring in a lot of extra income.

Let’s take a look at basement retrofitting: the making of a home apartment and tips to manage the “fine print” that comes with it.

On Regulations: Basement Suites and the Law

Homeowners need to be certain that they’re zoned for a basement suite. The rules differ from region to region.

You’ll need to check on the following details:

Local bylaws:
Find out if the city or town you live in has bylaws that govern permissions, health, and safety codes for secondary suites in your home. Also, find out if you need to be categorized as a multi-family home to have a separate apartment. Violating that kind of code can bring five-figure fines.

Building Code:
When your house was built, it was (hopefully) constructed to comply with the local building code. Whatever the codes were at that time will help determine whether you can put in an apartment now — or if the one that’s already there is in compliance.

Fire Code:
Determine what they are for a basement apartment in your area. These codes are known as retroactive. So, unlike building codes, as they change over time so do your requirements under them.  You may need to consider exits, detectors, sprinklers, and other systems.

Electrical Code:
A representative of your electrical-safety authority can tell you if the basement is wired correctly to carry the kind of energy load that appliances like refrigerators, dryers, and other power-hungry units can demand.

Once you’ve got the answers to these four basic questions, you can seek a certificate of compliance from your municipality. In general, expect to spend a few hundred dollars on inspections.

On Renovations: How Much is Necessary?

Typically, secondary suites have their own kitchen and bathroom. Beyond that, you’ll want to consider the basic livability of your basement space. Some examples of what to look for follow:

Moisture and Mold:
If your basement has moisture or mold, you’re going to need to dry, clean, and insulate. If the moisture is caused by cracks or leaks in the foundation you might need to contact a professional to fix the problem. Otherwise, your tenants are likely to turn up with expensive bills for ruined furnishings (or, worse, health complaints).

Entrances and Exits:
Beyond the needs of your local fire codes, you might not want new tenants coming and going through your own living space. This could mean that you need to install a secondary suite door.

Ceilings and Beams:
If you want to entice tenants to view your basement as a home, then unsightly exposed rafters may require a drop-ceiling covering (certain codes and bylaws require a basement to be fully drywalled  from wall to ceiling before you can use it as an apartment). Make certain you’ve enough clearance for heads and bookcases and the like.

Is your basement much like a cave? In the way of ugly rafters, without some windows and natural light, you may have difficulty getting anyone to take the apartment.

Money Matters: Insurance, Taxes, and Collecting the Rent

New occupants, and with them new stoves and other details, bring new insurance considerations. Consult with your provider early on and make certain your home is adequately covered.

When it comes to property taxes, be sure to take into account the impact of what will be your home’s suite-increased value. You’ll also want to figure in your new revenue from rent (and also your expenses as a landlord) the next time you file your income tax.

Finally, remember that you’re about to enter into business relationships with tenants. Understand your rights, and theirs, when it comes to rent and other details of the arrangement. Read the resident-tenant law in your area and have a copy on hand as you begin your new business.

By James O’Brien

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