Basement secondary suite cost: a worked Canadian budget example

A legal basement secondary suite costs much more than a basement finish because it is a separate dwelling unit: it needs its own kitchen and bathroom, a code-compliant exit, fire and sound separation from the main house, interconnected smoke alarms, adequate ceiling heights and window sizes, and often separate heating or ventilation. In this illustrative Ontario example, a 700 sq ft suite comes out at a planning figure of about $153,000–$267,000 including a 15% contingency and HST, before any tax credit or rent. Your numbers depend heavily on what the basement already has (height, a dry foundation, a plumbing rough-in, a separate entrance) and on your municipality's rules.

This guide applies the seven-step estimating method. For the cost of a basement finished as part of the main house, see basement finishing cost; for the federal credit, see renovation tax credits in 2026.

Step 1: confirm the suite is allowed

Before any design work, ask your municipality:

• whether zoning permits a secondary unit on your lot (Ontario's 2022 housing legislation generally allows up to three residential units on many urban residential lots, and other provinces and cities have also widened permissions, but local rules on parking, size and entrances still apply),
• what the building code requires for an existing house being converted (Ontario's Building Code, for example, has specific compliance options for second units in existing houses),
• what permits, inspections and fire safety checks are needed, and whether the fire service or electrical safety authority must also inspect,
• whether any development charges or fees apply.

A suite built without permits can expose you to orders to remove it, insurance problems and difficulty selling, and it may not qualify for credits that require the unit to meet local rules.

Step 2: write the scope

Illustrative scope for a 700 sq ft basement with 2.1 m (about 7 ft) clear height under the joists, dry foundation, no existing rough-in, side entrance possible:

Step 3: apply the illustrative range

Our renovation cost estimator preset for a basement secondary suite is $150–$275 per sq ft (an editorial illustration built from the components above, not survey data).

• Low: 700 × $150 = $105,000
• High: 700 × $275 = $192,500

Step 4: add one-time costs

Range: $118,000–$205,500.

Step 5: add a contingency

The house is older and the slab will be cut, so this example uses 15%:

• Low: $118,000 × 15% = $17,700 → $135,700
• High: $205,500 × 15% = $30,825 → $236,325

You can reproduce this with the contingency calculator.

Step 6: add HST

In Ontario, 13%:

• Low: $135,700 × 13% = $17,641 → $153,341
• High: $236,325 × 13% = $30,722.25 → $267,047.25

Step 7: offsets and financing

Multigenerational Home Renovation Tax Credit. If the suite is built so that a parent aged 65 or older, or an adult relative eligible for the disability tax credit, can live with you, and the conditions are met, the refundable credit for a renovation ending in 2026 is 14% of up to $50,000 of eligible expenses: $7,000. Check the CRA's line 45355 conditions before relying on it.

Rent. If the suite is for rent instead, rental income is taxable and the costs are treated under rental income rules (some as capital costs). Ask an accountant; this changes the after-tax cost substantially.

Financing. Since 15 January 2025, insured mortgage refinancing has been available to add a secondary suite, under CMHC rules on property value and loan-to-value. Ask your lender whether it offers it and on what terms.

Paying the contractor

On a contract this size, keep the statutory 10% holdback that Ontario's Construction Act requires, and tie payments to stages such as framing, rough-in inspections, drywall and final occupancy approval. See deposits, holdbacks and payment schedules and the holdback calculator.

What can move this budget most

1. Ceiling height. If the space is too low for the code, lowering the floor (underpinning or benching) is a major structural project.
2. Drainage. A wet basement must be fixed first.
3. Electrical service. A second kitchen can exceed the capacity of an older service.
4. Entrance. Cutting a new door through a foundation wall is more expensive than using an existing side door.
5. Heating. Shared ductwork may not be allowed between units without measures such as dampers or a separate system.

Related guides

For the contingency percentage used here and when to raise it, see how much contingency to keep. A suite contract should also be checked clause by clause against the renovation contract checklist.

FAQ

Is a "basement apartment" without permits the same as a secondary suite?

No. A secondary suite in the legal sense meets the zoning and building code requirements of your municipality and province. An unpermitted unit may have to be removed or brought up to code.

How long does a suite conversion take?

Design and permits can take weeks to months; construction often takes several months, with inspections at set stages.

Can I claim the multigenerational credit if I also rent the suite later?

The credit has conditions about who the unit is for and when; renting it out may affect eligibility. Check with the CRA or an accountant before you plan both.

Sources

• Canada Revenue Agency — Multigenerational Home Renovation Tax Credit (line 45355) and rental income
• Canada Mortgage and Housing Corporation — secondary suite refinancing and suite guidance
• Ontario government — Building Code and additional residential units
• Ontario e-Laws — Construction Act (holdback)