Illinois ADU ROI Calculator
Calculate the return on investment for an accessory dwelling unit in Illinois
Illinois Calculator
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Updated for 2025 with real Illinois rates, brackets, and regulations
Chicago legalized accessory dwelling units (ADUs) in 2020 through a pilot ordinance covering five city zones, subsequently expanded citywide. Coach houses (detached carriage-house style units above garages) and garden units (below-grade basement apartments) are the most common ADU types in Chicago's dense urban fabric, given limited lot sizes. A typical Chicago coach house conversion costs $150,000-$250,000 and can generate $1,400-$2,200/month in rent depending on neighborhood. Illinois's high property taxes add a unique wrinkle: adding an ADU will increase your property's assessed value, and with Cook County's 2.20% effective rate, a $150,000 value addition generates approximately $3,300/year in additional property taxes. ADU income is fully taxable at Illinois's 4.95% rate, though depreciation and expense deductions reduce the net taxable amount.
Calculate Your IL Tax
10-Year Total ROI
158.3%
Monthly Rental Income
$1,600/mo
Annual Gross Rent
$19,200/yr
Annual Net Income
$13,704/yr
Cap Rate
7.83%
Payback Period
12.8years
Cook Co. Property Tax Increase (2.10%)
$3,000/yr
10-Year Net Income
$137,040
Est. Value Added
$140,000
Breakdown
Insight
A $175,000 ADU generates $13,704/year net income (7.8% cap rate), paying back in 12.8 years. Chicago's ADU Ordinance (2020) legalized coach houses, garage conversions, and garden apartments — a game-changer for Chicago homeowners. Key IL-specific considerations: (1) Cook County's 2.10% property tax rate means a $175,000 ADU adds ~$3,000/year in taxes on the improvement. (2) The ADU Affordable Requirements Ordinance pilot (some neighborhoods) may require below-market rent for subsidized financing. (3) Chicago requires ADU permits and compliance with the Residential Landlord and Tenant Ordinance (RLTO). (4) Chicago's "Just Cause" eviction ordinance (2023) applies to ADU tenants in buildings with 7+ units. Verify zoning (RS-1 through RM zones) and setback requirements with the Dept. of Buildings before construction.
AI Explanation
What This Means
Based on default inputs, the Illinois ADU ROI Calculator shows a 10-year total roi of 158.3 %. Key figures: Monthly Rental Income: $1,600/mo, Annual Gross Rent: $19,200/yr, Annual Net Income: $13,704/yr, Cap Rate: 7.83%, Payback Period: 12.8years, Cook Co. Property Tax Increase (2.10%): $3,000/yr, 10-Year Net Income: $137,040, Est. Value Added: $140,000.
Key Insights
A $175,000 ADU generates $13,704/year net income (7.8% cap rate), paying back in 12.8 years. Chicago's ADU Ordinance (2020) legalized coach houses, garage conversions, and garden apartments — a game-changer for Chicago homeowners. Key IL-specific considerations: (1) Cook County's 2.10% property tax rate means a $175,000 ADU adds ~$3,000/year in taxes on the improvement. (2) The ADU Affordable Requirements Ordinance pilot (some neighborhoods) may require below-market rent for subsidized financing. (3) Chicago requires ADU permits and compliance with the Residential Landlord and Tenant Ordinance (RLTO). (4) Chicago's "Just Cause" eviction ordinance (2023) applies to ADU tenants in buildings with 7+ units. Verify zoning (RS-1 through RM zones) and setback requirements with the Dept. of Buildings before construction.
What You Can Do
Enter your actual figures in the calculator above for a personalized breakdown. Consider consulting a tax professional for comprehensive planning, especially for complex situations involving multiple income sources or deductions.
Keep In Mind
This calculator provides estimates based on 2026 rates. Actual tax liability may vary based on credits, exemptions, and other factors not captured here. This is for educational purposes only and should not be considered tax advice.
How the Illinois ADU ROI Calculator Works
The Illinois ADU ROI Calculator uses 2026 tax rates, brackets, and deductions specific to Illinois to provide you with an accurate estimate of your tax obligations. Unlike generic federal-only calculators, this tool accounts for the unique tax structure that Illinois residents face.
Formula
Annual ROI = (Monthly Rent × 12 - Property Tax Increase - Operating Costs) ÷ Construction Cost × 100. Property Value Add = ADU Monthly Rent × 12 ÷ Local Cap Rate.Simply enter your financial details above, and the calculator instantly computes your results using the latest available data. All calculations happen directly in your browser — your personal information is never sent to any server or stored anywhere.
Why Use a Illinois-Specific Calculator?
State-Specific Rates
Uses real 2026 Illinois tax brackets, rates, and thresholds — not generic national averages that miss state-level nuances.
Local Programs & Exemptions
Factors in Illinois-specific programs, exemptions, and deductions that national calculators simply don't account for.
Instant & Private
All calculations run locally in your browser. No account required, no data stored, no waiting for results.
AI-Powered Explanations
Get a plain-English breakdown of your results with actionable insights you can actually use for financial planning.
What's Included
Chicago ADU Laws
Built around Chicago's 2020 ADU ordinance — coach houses, garden units, and carriage houses
IL Property Tax Impact
Factors in Cook County's 2.20% rate on added ADU value — a significant cost many investors overlook
Net ROI Calculation
Cash-on-cash return, payback period, and 10-year net income after taxes and expenses
Frequently Asked Questions
Are ADUs legal in Chicago?
Yes. Chicago passed an ADU pilot ordinance in 2020, expanded to all Chicago wards. Allowed types include coach houses (accessory buildings on an alley), garage conversions, basement/garden units, and additions. Permits are required. The ordinance requires an owner-occupancy affidavit — the property owner must live on-site.
How much does an ADU cost in Chicago?
Chicago ADU costs vary by type: garden unit (basement conversion) $80,000-$150,000, coach house conversion $120,000-$200,000, new detached coach house $180,000-$300,000. Costs are higher than suburban or downstate IL due to labor costs, permit fees ($2,000-$5,000), and Chicago's prevailing wage requirements on some projects.
What rent can I charge for a Chicago ADU?
Chicago ADU rents depend heavily on neighborhood: North Side (Lincoln Park, Lakeview) $1,800-$2,500/month for a 1-bedroom coach house, Northwest/West Side (Logan Square, Pilsen) $1,400-$1,900, South Side $1,000-$1,500. Garden units run 10-20% less than above-grade units in the same area.
How will an ADU affect my Illinois property taxes?
Adding an ADU increases your property's assessed value, and Cook County will reassess accordingly. A $150,000 ADU addition at Cook County's ~2.20% effective rate adds approximately $3,300/year in property taxes. Apply for the Homestead Exemption on any new structure you occupy — ADU-only properties may lose the exemption if you don't live on-site.
Can I Airbnb my Chicago ADU?
Chicago requires a Shared Housing license for short-term rentals (Airbnb, VRBO). The Chicago Shared Housing Ordinance limits STRs in most neighborhoods and prohibits them in some. If you occupy the main house and rent the ADU short-term, you may need both a Shared Housing Host license and compliance with the guest unit registration process. Long-term (30+ day) rental is simpler and doesn't require the STR license.
Important Information for Illinois Residents
Tax laws in Illinois can change annually. This calculator is updated regularly to reflect the latest 2026 rates and regulations, but you should always verify important financial decisions with a qualified Illinois tax professional or CPA.
This tool is designed for informational and educational purposes. While we strive for accuracy using official Illinois Department of Taxation data, the results should be used as estimates for planning purposes only. Your actual tax liability may differ based on credits, special circumstances, and legislative changes that occur after our last update.
For filing deadlines, payment schedules, and official forms, visit the Illinois Department of Taxation and Finance website. If you have complex tax situations involving multiple states, business income, or significant investment gains, professional guidance is recommended.
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