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Why a House with an In-Law Suite Can Be a Good Choice

A house with a granny apartment comes with certain restrictions, but can still be worthwhile
A house with a granny apartment comes with certain restrictions, but can still be worthwhile Photo: Getty Images/Westend61

December 26, 2024, 4:30 pm | Read time: 6 minutes

A house with a granny apartment is a worthwhile investment that offers both financial and practical benefits. Here are some of the most important points.

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A separate residential unit in your own home can be very practical, especially when your children become more independent or family members, such as grandparents, are looking for a smaller apartment. There is also the option of renting out the in-law suite.

What is an In-Law Suite?

An in-law suite is a self-contained, independent residential unit that is integrated into a detached house. As a rule, this apartment has a separate entrance and all the facilities necessary for independent living.

The apartment is usually equipped with a kitchen or eat-in kitchen, a living room, a bathroom, and a bedroom. The separate living unit is often located in the basement, on the ground floor, or in the attic. Despite the separation, however, this apartment is part of the main building and is, therefore, not a separate property.

Where are In-Law Suites located in the house?

On the ground floor

The first floor is often shared with the main apartment, or the apartment occupies its own separate part. However, the entrance is separate, and the bathroom and kitchen etc. are also separate.

In the attic

In some houses, the apartment is located under the roof. The attic is usually completely converted, often with its own access via a staircase or external staircase.

In the basement

The basement is ideal for an in-law suite. Especially if the basement is well-developed and has sufficient light and windows. In addition, a basement usually has a separate entrance and thus offers sufficient privacy.

In an extension

Depending on the location and size of the house, the in-law suite can be integrated into the house with the help of an architect. If there is not enough space in the main house, an extension is also possible. With an extension, you just have to make sure that building regulations, distance limits, and other applicable regulations are observed.

Why Is a House with an In-Law Suite Worthwhile?

1. Tax Advantages

If you rent out an in-law suite, you can claim a proportion of the associated expenses against tax. These include renovation expenses, depreciation, and interest on loans. Operating costs such as water, electricity, and heating can also be partially deducted when renting out.

2. Financial Advantages

The additional rental income can also help to reduce the financial burden of the loan or maintenance costs. Especially in sought-after residential areas, an in-law suite can be very lucrative.

3. Flexible Use

As well as being rented out, a separate residential unit can also be used by family members, whether for elderly relatives who may need assistance or adult children who are looking for their own apartment.

An in-law suite in a house can be particularly interesting for developers who value flexibility because of the wide range of possible uses. It offers an opportunity to adapt the living space to your own needs, for example, as an office or hobby room, without having to give up the privacy of the main house.

4. Increase in Value

An in-law suite can also increase the value of the property. This is particularly advantageous if you want to sell it again later. Houses with in-law suites may also be in demand in the future with regard to multi-generation houses.

A House with an In-Law Suite Is Not Suitable for Everyone

However, a house with an in-law suite also comes with certain restrictions and is therefore not suitable for everyone. In particular, people who attach great importance to privacy and cannot tolerate other residents in the same building because they feel disturbed by the close proximity should refrain from buying. Even if no specific use is planned, additional financial expenditure due to planning and construction, as well as possible adaptations, can quickly become a burden. In this case, it makes more sense to refrain from buying a granny apartment.

When building an in-law suite, there are numerous legal and building regulations that must be observed. It is particularly important to ensure in advance that all requirements are met. In many cases, permission from the relevant local authority is required, as two residential units are not always permitted. It is also important that the apartment has a separate entrance and that the walls and ceilings meet the necessary fire protection requirements.

Tenancy Law

It is also necessary to familiarize yourself with tenancy law. As the landlord of an in-law suite, you must also comply with tenancy law and statutory provisions, although these can sometimes differ. In the case of a termination, for example, there is usually a special spatial proximity relationship with in-law suites, which can affect the notice period.

According to the Berlin Tenants’ Association, the landlord can terminate the tenancy of the in-law suite without stating a legitimate interest (Section 537a BGB). The tenant has reduced rental protection in this tenancy, as cohabitation with the landlord under one roof is considered a unique living situation.

Note: When renting out an in-law suite, it is advisable to set the rent based on the local rent index. If the rent is significantly lower than the local comparative rent, the landlord could run into problems with the tax office, as the tax office considers this to be a partially paid rental and may treat the difference as a gift. To avoid problems, it is therefore important to base your rent on the average rent.

More on the topic

Energy Certificate for Letting

If the in-law suite is considered a separate unit and is rented out, you generally have to submit an energy performance certificate. However, this requirement is waived if the apartment is provided privately or used exclusively within the family. An energy performance certificate serves to give tenants transparent information about anticipated energy costs. It contains information on energy consumption and recommendations on energy efficiency. Failure to provide an energy performance certificate for the separate rental unit can result in substantial fines in certain instances.

This article is a machine translation of the original German version of MYHOMEBOOK and has been reviewed for accuracy and quality by a native speaker. For feedback, please contact us at info@myhomebook.de.

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