Can laneway homes be sold separately in Burnaby?
Selling Laneway houses separately from the main house is prohibited in Burnaby or Vancouver. “Strata laneway homes would be very profitable and attractive financially. Homeowners and builders are expected to be interested in this option if permitted. Stratification of laneway homes (which allows the laneway home to be sold and owned separately from the main house) is not being considered for this phase of the laneway program. Still, it could be considered in future phases.
The concept of permitting strata laneway homes was noted to potentially exert considerable upward pressure on the value of single-family lots. However, the city proposed specific measures:
- Mandating a substantial contribution towards amenities from applicants seeking laneway stratification.
- Requiring that the new laneway home be sold at a price below the market rate.
Properties featuring laneway houses typically command a higher resale value and experience an elevation in overall property worth. This elevation can lead to an enhanced return on the investment in your primary residence. However, it’s important to note that this enhancement in property value will also translate into higher property taxes, as tax assessments are influenced by property value.
What value does a laneway house add?
What is the added value of a laneway house to a property? In Vancouver, where laneway houses have a longer history, quantifying this value can be challenging. The current approach is to correlate the increased value with the construction cost of the new laneway house.
The value of laneway houses in two distinct scenarios. When it functions as an income property, its value increases proportionally. For instance, if a property with two rental units gains a third through the addition of a laneway house, the assessment is relatively straightforward.
However, assessing the value of a single-family home with an added laneway house is more nuanced. If the laneway house replaces vehicular parking, such as a garage, its value may be offset by the loss of parking space.
If the laneway house is constructed above the garage, its value becomes subjective and depends on factors like the quality of construction.
There is no fixed numerical value for adding a laneway house.
Renting Out Your Laneway Home
A laneway house can be a source of rental income, likely a primary motivation for considering buying and its construction.
It’s worth noting that two-bedroom laneway houses tend to command higher rental rates than their one-bedroom counterparts.
Despite the relatively compact nature of 2-bedroom laneway houses, such units in Vancouver have been observed fetching monthly rentals ranging from $1800 to $2300 and up to more than $3500. These figures are far from insignificant and can substantially contribute as a supplementary source to cover Vancouver’s high mortgage costs.
Tax Deductions For A Laneway House
The usual tax deductions for rental properties are applicable if you own a laneway house. These deductions encompass expenses related to record-keeping, laneway house maintenance and repairs, and a proportion of your property taxes based on square footage.
You can deduct reasonable expenses for generating rental income from your laneway house. Click for a compilation of rental expenses eligible for deduction according to the CRA guidelines.