California ADU requirements set statewide floors that every city and county must honor: a detached unit can reach 1,200 square feet, height limits start at 16 feet, setbacks cannot exceed four feet, permits must be decided in 60 days, and owner-occupancy is not required. Local governments can pass their own ordinances, but nothing they adopt can be more restrictive than the state baseline. If a jurisdiction has no ADU ordinance, the state rules apply directly.
Size, Height, and Setback Limits
A detached ADU can be built up to 1,200 square feet. An attached ADU can reach 50 percent of the primary home’s floor area, with a guaranteed minimum of 800 square feet regardless of that percentage. No local agency can cap a studio or one-bedroom below 850 square feet, or a two-plus bedroom below 1,000 square feet.1California Department of Housing and Community Development. Accessory Dwelling Unit Handbook At the small end, cities cannot set minimums that would prohibit efficiency units, so ADUs as compact as 150 square feet are possible depending on the local rules.
Height works on a tiered system. The baseline for detached ADUs is 16 feet. That rises to 18 feet on lots within a half-mile walking distance of a major transit stop or high-quality transit corridor, with an additional two feet allowed to match the primary home’s roof pitch. The same 18-foot limit applies on lots with an existing or proposed multifamily, multistory building. Attached ADUs can go up to 25 feet or the height of the primary dwelling, whichever is lower, though local agencies are not required to allow more than two stories.1California Department of Housing and Community Development. Accessory Dwelling Unit Handbook
For setbacks, converting an existing structure into an ADU requires no setback at all. New construction outside an existing footprint faces a maximum required setback of four feet from side and rear lot lines.2California Legislative Information. California Government Code 65852.2 Local agencies cannot apply floor area ratio, open space, or minimum lot size standards in a way that would block an 800-square-foot ADU meeting the four-foot setback rule.
The Junior ADU Option
A junior accessory dwelling unit is a smaller, cheaper path. JADUs max out at 500 square feet and must be built entirely within the walls of an existing single-family home, including enclosed attached spaces like a garage.3California Legislative Information. California Government Code 65852.22 A JADU needs cooking facilities with a sink but doesn’t have to include its own bathroom; it can share sanitation with the main house.
The upside is significant. JADUs are exempt from impact fees entirely and cannot trigger utility connection fees.4California Department of Housing and Community Development. Frequently Asked Questions – Junior Accessory Dwelling Units Parking cannot be required. The tradeoff: a JADU cannot be sold separately from the primary home, cannot be used as a short-term rental, and must be rented for more than 30 days if rented out. As of January 1, 2026, the owner-occupancy question for JADUs turns on the bathroom: if the JADU shares sanitation with the main house, the owner must live in either unit; if the JADU has its own bathroom, no owner-occupancy is required.1California Department of Housing and Community Development. Accessory Dwelling Unit Handbook You can have both a JADU and a full ADU on the same single-family lot.
Owner-Occupancy and Rentals
California does not require you to live on the property. Both the primary house and the ADU can be rented out.1California Department of Housing and Community Development. Accessory Dwelling Unit Handbook Earlier versions of the law had a sunset date on this prohibition; the legislature removed it, so the rule is permanent.
Short-term rentals are handled differently. Local agencies can require ADU rental terms longer than 30 days, and ADUs approved under certain state provisions must be rented for more than 30 days regardless of what the local ordinance says. Check your local rules before listing an ADU on a platform like Airbnb.
Selling an ADU separately from the main house became possible under AB 1033, effective October 2023, but only where the local government has opted in by adopting its own ordinance authorizing condo-style ADU sales. Without that local action, an ADU stays tied to the primary property.
Impact Fees and Utility Connections
ADUs under 750 square feet of interior living space are completely exempt from impact fees. For ADUs of 750 square feet or larger, impact fees must be charged proportionally based on the ADU’s square footage relative to the primary dwelling.2California Legislative Information. California Government Code 65852.2
Utility rules depend on the type of build. If you are converting space inside an existing structure like a garage or basement, the local agency cannot require a new or separate utility connection or charge a connection fee. For a newly built detached ADU, a new connection may be required, but the fee must be proportionate to the unit’s size or its burden on the system.2California Legislative Information. California Government Code 65852.2
Permit Timing and Inspections
ADU permits are approved ministerially. Your local agency reviews the application against objective standards, without a public hearing or discretionary vote. If the plans meet the rules, the permit gets issued.
The agency has 60 days from receiving a complete application to approve or deny it. If it fails to act within that window, the application is deemed approved by operation of law.2California Legislative Information. California Government Code 65852.2 An incomplete application restarts the clock, so documentation matters. Confirm property lines with a professional survey, identify utility line locations, verify emergency vehicle access, and prepare a Title 24 energy compliance report before you submit. If you are seeking local fee waivers or affordability incentives, your jurisdiction may require you to record a deed restriction or covenant limiting occupancy or rental terms.
After the permit issues, construction requires a sequence of inspections covering the foundation, framing, electrical and plumbing rough-in, insulation, and final systems. The homeowner or contractor schedules each one at the right stage. Skipping ahead before an inspection is signed off means tearing work apart later. Once the final inspection confirms the unit meets structural, fire, and safety standards, the jurisdiction issues a Certificate of Occupancy, which is the legal clearance to inhabit or rent the unit.
Grants and Financing
The California Housing Finance Agency’s ADU grant program reimburses homeowners up to $40,000 in predevelopment costs, including architectural plans, site prep, soil tests, Title 24 reports, and permit fees.5California Department of Housing and Community Development. Funding for ADUs The money can also go toward an interest rate buy-down on a construction loan. It does not cover labor or building materials. Eligibility requires the homeowner to earn less than 80 percent of the Area Median Income for their county and to own and occupy the property as a primary residence.6CalHFA. ADU Grant Program
The catch: as of December 2023, CalHFA announced that the latest round of ADU grant funding had been fully allocated.6CalHFA. ADU Grant Program The program site does not indicate when or whether new funding will become available. Contact a CalHFA-approved participant to check current availability before you pay for plans. Some local governments offer their own ADU incentives, such as low-interest loans, local fee waivers, or technical assistance, so check with your city or county housing department too.
For construction financing, Fannie Mae treats an ADU like any other home improvement, so any standard Selling Guide loan product will work, including conventional purchase, refinance, and affordable lending. Borrowers who qualify for a HomeReady loan can include ADU rental income toward qualifying.7Fannie Mae. Accessory Dwelling Units Home equity lines of credit and cash-out refinances are common alternatives when you have enough equity in the existing property.
Insurance and Property Tax Effects
Building an ADU changes your insurance picture in ways that catch owners off guard. You are generally required to notify your insurer about any ADU construction. An attached ADU or interior conversion is typically covered under your existing homeowners policy as part of the main dwelling. A detached ADU usually falls under “other structures” coverage, which is often capped at around 10 percent of your dwelling coverage, rarely enough to rebuild a standalone unit. If you plan to rent the ADU, you may need landlord or rental property insurance to cover tenant liability. Short-term rental hosting often requires either a home-sharing endorsement or a separate landlord policy. Call your insurer before construction starts and describe the project: attached or detached, who will live there, and whether it will be rented.
On property taxes, Proposition 13 protects your existing home’s assessed value. The county assessor reassesses only the new construction, not your entire property. The ADU is assessed at its current construction value and added to your tax bill, while your primary home’s Prop 13 base stays locked.
Federal Taxes on ADU Rental Income
State ADU law doesn’t govern how you handle rental income at tax time, but the federal rules follow directly from renting the unit out. Rental income is taxable and reported on Schedule E, where you can also deduct depreciation, repairs, insurance, and the rental portion of property taxes and mortgage interest.8Internal Revenue Service. Renting Residential and Vacation Property
If you rent the ADU fewer than 15 days in the tax year, the IRS does not require you to report the income, and you cannot deduct rental expenses for those days. If you use the ADU personally for more than the greater of 14 days or 10 percent of the days it is rented at fair market value, the IRS classifies the unit as a personal residence, which limits your rental deductions. For a year-round long-term tenant, that personal-use limit doesn’t apply.8Internal Revenue Service. Renting Residential and Vacation Property Rental income may also be subject to the 3.8 percent net investment income tax if your modified adjusted gross income exceeds $200,000 filing single or $250,000 filing jointly. Track income and expenses from day one; reconstructing years of records during an audit is far harder than logging them as you go.