A Laneway home is a detachable structure built on your main residential property. The laneway home faces the lane. In case there is no lane, the house is called a garden suite or coach house.
Building a laneway home has many benefits. It increases the value of your property, which is a plus in case you decide to sell. It’s also a cheaper way of providing a home to your loved ones such as an aged parent or a grown child. It also provides a way to boost your rental income.
Building a Laneway Home in Toronto
Building a laneway home in Toronto was approved in 2018. Homeowners can build a secondary home on their property as long as its fronting or backing is on a laneway.
The homes come in handy to reduce the shortage of rental houses in the city. When built for rental, they provide additional income to the homeowners who can use it to pay for mortgage or other expenses.
Also, they are useful to accommodate aged parents or adult children, who might otherwise not afford to buy a similar house in the city.
One of the many benefits of laneway homes is to generate rental income. Here is more on how the home can boost your rental income.
Rent Out the Laneway Home
In cities such as Toronto, Canada, there is a shortage of rental houses. Also, when you build a laneway home, you can rent it out and earn that extra income. With the high rents, you are assured of recovering your investment within no time.
Living in Toronto is expensive and therefore most tenants are looking to save money on rent. Since the demand for housing is greater than the supply, the rent is high. However, rents are lower on laneway homes and that’s why they attract more tenants. These homes provide the comfort of a standalone house at a cheaper price than an apartment.
Therefore, when you build a laneway home, you are assured of tenants and consequently rental income. You can use the money to pay your mortgage and remain with extra.
Your rental laneway home qualifies you for a tax deduction on interest on your mortgage if you built it using a loan on your main residence. This way, you pay less mortgage. However, to claim a tax deduction, you need to report the rental income. Nevertheless, the additional property tax is less in comparison to the rental income the home will generate.
Rent Your Main House
You may choose to move into the laneway home and rent out your main house. This way, you can earn more rental income enough to pay your mortgage and remain with a substantial amount for your personal use.
Increase Your Home Value
If you build a laneway home, it means your property has a high sqft. You can get rental income from the extra space. If you intend to sell, your home will be more attractive to the buyers than a property without a laneway home. The secondary home adds more value to your property and you are likely to sell at higher prices.
The buyer will be looking at the extra space they will get at the property and the additional rental income they will get if they decide to rent it out.
