An accessory dwelling unit (ADU) is a second dwelling unit created on a lot with a house, attached house or manufactured home. The second unit is created auxiliary to, and is smaller than, the main dwelling.
ADUs can be created in a variety of ways, including conversion of a portion of an existing house, addition to an existing house, conversion of an existing garage or the construction of an entirely new building.
Under Oregon's tax laws, the construction of an ADU could significantly increase the property taxes. That's because the amount of taxes levied each year and how they are determined is part of Oregon's complicated and complex law. It takes into consideration the effects of Measures 5 and 50, and those make it difficult to predict just how much taxes will increase or decrease if you build an ADU.
Before you start an ADU project, it's important to contact the assessor's Customer Service line at 503.988.3326.
How will adding an ADU affect your property taxes?
- A Multnomah County appraiser will visit your property to appraise the entire property, including the new ADU
- The added value associated with the construction of the ADU (and any other new improvements to the property) will be assessed and taxed
- The construction of the ADU will not trigger a reset of the Maximum Assessed Value (MAV)
Estimating Additional Taxes
The potential additional taxes associated with the ADU can be estimated by multiplying the Market Value by the Tax Rate by the Changed Property Ratio as explained below:
Market Value: If you are hiring a contractor to do the work, the cost of construction may be a good estimate of the market value of the new ADU. However, keep in mind that the cost does not necessarily equal market value.
Tax Rate: To find the tax rate for your area, locate the "code area" on your tax bill. Using the Levy Code Area Rate Sheet, look up the "total all rates" amount for your code area. Rates are expressed in dollars-per-thousand ($1/$1000).
Changed Property Ratio (CPR): look up the current changed property ratio for your property type.
- Multiply the market value times the tax rate
- Multiply the number from step 1 by the changed property ratio to determine the estimated additional yearly tax
The calculation outlined above is for illustrative purposes only and should not be taken as a representation of your actual tax amounts or calculation. The calculation is based on historic values, tax rates, and changed property ratios and hypothetical new construction values. The actual tax amount and value(s) will vary. Multnomah County is not responsible for any decisions made by a taxpayer based on the results of this calculation.
For information on permitting fees and building requirements, contact the permitting jurisdiction for your property. The Multnomah County Assessor's office is not the authority for permitting or building requirements.
If you have more questions regarding the property tax implications of constructing an ADU, contact DART Customer Service at 503.988.3326 or email@example.com.