ADU vs Buy Next Door Financial Analysis
15-year ownership comparison with tax implications
Input Parameters
Buy Next Door Scenario
Property Purchase Price
Total cost for lot with 2 units
Immediate Sale Price (1 unit)
What you can sell one unit for immediately
Front Unit Value After Subdivision
Estimated value of front unit once lot is subdivided
Renovation Cost (unit you keep)
Subdivision Costs
Surveying, permits, utility connections, legal fees
Front Unit Use
Office - Tax Deductible Rent
Rental Income
Office Rent to Self (monthly)
Tax deductible business expense
Rental Income (monthly)
Taxable rental income at marginal rate
Space Gained (sq ft)
ADU Construction Scenario
Construction Cost
Design & Permits
Utilities & Site Work
Electrical, plumbing, gas connections
ADU Size (sq ft)
ADU Value (% of market rate)
Typically 60-80% of standalone property
Shared Parameters
Ownership Period (years)
Annual Appreciation Rate (%)
Property Tax Rate (%)
Tax Parameters
Marginal Tax Rate (%)
For office rent deduction
Capital Gains Tax Rate (%)
1031 Exchange on Buy Scenario
Yes - Defer capital gains via 1031
No - Pay capital gains tax
1031 exchange defers capital gains on investment property
Market Price per Sq Ft
From your comps analysis
Selling Costs (%)
Investment Portfolio Return (%)
Alternative investment return (opportunity cost)
Include Opportunity Cost in Analysis
No - Show cash flows only
Yes - Include opportunity cost
Toggle between cash-only vs. full economic analysis
Recalculate Analysis
Financial Analysis Results
Buy Next Door Scenario
$0
ADU Construction Scenario
$0
Comparison & Recommendation
Detailed Breakdown
Component
Buy Next Door
Build ADU
Difference
Calculating...