Buying an Edmonton Home With a Basement Suite

Key takeaways

• "Suite" in a listing is a description, not a legal status. Verify with the City rather than the advertisement.
• Lenders may count a portion of documented rental income toward qualifying, which can materially raise what you can borrow.
• A non-conforming suite may reduce or eliminate that benefit, and can complicate insurance.
• Being a landlord is a job — tenant selection, repairs at inconvenient hours, vacancy, and Alberta's residential tenancy rules.
• Do the numbers with the suite empty. If the purchase only works when it is rented, it does not work.

Who this guide is for

Edmonton buyers considering a home with an existing secondary suite, or one they might add later. Permitting and safety requirements are the City of Edmonton's; the linked pages are the authority.

Legal, non-conforming, or neither

A legal secondary suite has been developed under permit and meets the requirements applying to it — separate entrance, ceiling heights, egress windows, fire separation, smoke alarms and ventilation among them. There is a record of it.

A suite built without permits may be perfectly comfortable and still be a problem: it may not meet fire-safety requirements, your insurer may treat the property differently, and enforcement can require costly changes.

The way to settle this is with the City, through permit and inspection records — not by asking whether it "has always been rented out".

How lenders treat suite income

Many lenders will count a share of documented rental income when calculating what you can borrow — the proportion varies by lender and by whether the suite is legal. That can be the difference between qualifying for a house with a suite and not qualifying at all.

Two cautions. Policies differ enough that this is a question for your mortgage professional about a specific property, not a general assumption. And qualifying on suite income means your ability to pay assumes a tenant. Ask yourself what happens during a vacancy, because vacancies happen.

What being a landlord actually involves

• Finding and screening tenants, within the limits of human rights legislation.
• Alberta's Residential Tenancies Act — notice periods, deposit handling, entry rules and the process for ending a tenancy.
• Repairs, on the tenant's timeline rather than yours.
• Sharing a building with someone. Noise, parking, laundry and the front walk in winter all become negotiations.
• Tax. Rental income is reportable, and claiming expenses against it has consequences worth understanding before you start.

None of this is a reason not to do it. It is a reason to decide deliberately rather than treating the rent as free money attached to a house.

Questions to ask before you offer

• Is the suite permitted, and can that be evidenced from City records?
• Is it currently tenanted, and if so on what terms — because an existing tenancy may continue after possession.
• What is the actual rent, and what does it include?
• Are utilities separately metered, or shared?
• Has the insurer been told there is a suite, and what does that do to the premium?
• What would it cost to bring the suite to legal standard if it is not there already?

Running the numbers honestly

Work out the monthly cost of the house with the suite empty. If that figure is comfortable, the rent is upside and you are in a strong position. If it is only affordable when tenanted, you are relying on an income you do not control — and a vacancy, a bad tenant or a required renovation becomes a genuine problem rather than an inconvenience.

Our affordability guide walks the underlying budget arithmetic, and it applies here with the rent set to zero.

Sources

• City of Edmonton — Secondary suites
• City of Edmonton — Home improvement permits
• Service Alberta — Residential tenancies
• Canada Revenue Agency — Rental income

Frequently asked questions