Thinking about adding an in-law suite or rental unit to your Latham home? You’re not alone. Many homeowners want more space for family or a way to offset costs. The catch is that Latham follows Town of Colonie rules that treat ADUs very specifically. In this guide, you’ll learn what is allowed, what it costs, how to finance it, and whether multigenerational living or renting makes sense for you. Let’s dive in.
What an ADU means in Latham
An accessory dwelling unit is a small, secondary home on the same lot as your primary house. In the Town of Colonie, ADUs must be attached to the main home and are limited to occupancy by individuals related to at least one owner-occupant. The permit is tied to owner-occupancy and ends if conditions change. The Town code makes ADUs a better fit for multigenerational families rather than rentals to unrelated tenants.
The town also limits each lot to one ADU and requires off-street parking. Plan for two parking spaces per dwelling and for the ADU to meet setbacks, lot coverage, and finished-space definitions that apply in your zoning district.
Multigenerational living vs rental in Latham
Multigenerational use: why it fits here
- The code is designed for owner-occupants housing relatives, which streamlines approvals.
- You can support aging parents or adult children while maintaining privacy.
- You avoid the added responsibilities of being a landlord to unrelated tenants.
Renting to unrelated tenants: what to know
- The Town of Colonie’s ADU rules restrict occupancy to relatives of an owner-occupant.
- Renting an ADU to an unrelated tenant is generally not permitted and can trigger enforcement.
- Incentives or financing programs do not override local zoning, so the town code controls use.
Permits and approvals you will need
You will need a building and zoning permit from the Town of Colonie Building Department. Typical submittals include an application, drawings, electrical permits, Certificates of Insurance, and any required sewer, water, or Albany County Health permits. Initial plan review is often 5 to 15 business days, but full approvals can take longer depending on scope. See the town’s residential permit guidance for details.
Your project must meet New York State building and energy codes, including egress and smoke/CO requirements. The Town outlines the codes it has adopted, which currently align with the 2020 NYS codes. Review the local building codes summary as you plan your design.
If your home has a private well or septic system, contact Albany County Health early. Separate or expanded connections can trigger additional approvals.
Costs and timing: what to expect
Every site is different, but national ranges provide a helpful starting point:
- Basement or garage conversions are often the least expensive, from tens of thousands into the low six figures depending on condition and upgrades.
- New construction can run roughly $100,000 to $300,000 or more once you include design, foundation, utilities, finishes, and permits. Factory-built offerings may advertise lower starting prices, but installation and site work add cost. This overview of ADU costs explains the common range and hidden items.
Projects can take a few months for conversions and 6 to 12 months or more for larger builds. Budget for potential electrical panel upgrades, driveway or parking changes, drainage work, and utility fees.
Financing and incentives
Mortgage and rehab options have become more ADU-friendly. FHA guidance now allows certain loans, including 203(k), to finance ADUs and may count a portion of ADU rental income in qualifying calculations when local rules allow it. Review current policy highlights from HUD/FHA and check with your lender on documentation and appraisal requirements.
New York State’s “Plus One ADU” program offers grants for eligible owner-occupants in participating communities. The Town of Colonie is not listed among current participants, but you can monitor updates and local partners on HCR’s Plus One page.
Albany County created a property tax exemption for the increase in value from building an ADU. Qualifying owners get a full county tax exemption on the value increase for five years, then a phased reduction over five more years, subject to a $3,000 minimum and $200,000 cap. Short-term rentals are excluded, and the program takes effect January 1, 2026. Confirm how town and school taxes are treated with local assessors. Read the county’s summary of the ADU tax exemption.
Is an ADU right for your Latham property?
Ask yourself what problem you want to solve. If the goal is to support family while keeping everyone close, an attached ADU is aligned with local rules. If you were hoping to rent to unrelated tenants, the town’s owner-occupant and family-occupancy requirements will limit that plan.
Also assess your lot and home. You need room to attach the unit, space for parking, and a design that meets setbacks and code. A basement or garage conversion can be a cost-effective path if the existing structure is suitable.
Next steps for Latham homeowners
- Start with the Town of Colonie Building Department to confirm what is allowed on your lot and what to submit.
- Speak with the Town and County Assessors about how an ADU could change your tax bill and whether you may qualify for the county exemption.
- If you have a well or septic, contact Albany County Health before finalizing design.
- Get quotes from a contractor or architect for an attached conversion and an attached addition so you can compare scope, cost, and timing.
- Talk to lenders about FHA 203(k) or other ADU-friendly options, and check HCR’s Plus One page for any local programs.
Ready to weigh your options or find a home that already has space for an in-law suite? Connect with Team Taylor for local guidance and a plan tailored to your goals.
FAQs
Can I build a detached ADU in Latham and rent it to an unrelated tenant?
- No; Colonie’s code requires attached ADUs and limits occupancy to relatives of an owner-occupant, so detached rentals to unrelated tenants are generally not allowed.
What permits are required for an ADU in the Town of Colonie?
- You need building and zoning permits with plans, trade permits, insurance certificates, and any needed sewer, water, or health approvals, followed by inspections.
What are typical ADU costs for Latham homeowners?
- Conversions can range from tens of thousands into the low six figures, while new attached construction often runs roughly $100,000 to $300,000 or more depending on site and finishes.
Are there incentives to help pay for an ADU in Albany County?
- Yes; Albany County’s ADU tax exemption reduces the county tax on the value increase for up to 10 years starting in 2026, subject to limits and exclusions.
Can I use ADU rental income to qualify for a mortgage?
- Possibly; FHA and other programs may count a portion of ADU rental income when local rules allow rentals and when documentation and appraisal requirements are met.
