ADUs in Loudonville: What the New Tax Break Could Mean

Thinking about adding an accessory dwelling unit to your Loudonville property? A new Albany County tax exemption is set to make ADUs more affordable for many homeowners. If you are weighing costs, zoning, and long‑term plans, you want to know what this break actually covers and how it fits with Town of Colonie rules. Below, you’ll find what the law says, how to estimate savings, and the steps to take next. Let’s dive in.

What Albany County’s ADU tax break does

Albany County approved a temporary property tax exemption tied to the added assessed value from creating one or more ADUs. The county says the program becomes effective January 1, 2026. It applies when the ADU increases your property’s value by at least $3,000, up to a cap of $200,000 in added market value. The county announcement sets out the full framework.

For the county portion of your tax bill, 100% of the added value is exempt for the first five years. The exemption then phases down over the next five years at 75%, 50%, 25%, 15%, and 5%. The county also bars short‑term rentals for any ADU using this exemption, so the unit must be used for long‑term housing.

This is a county law, so it affects only the county share of taxes on the ADU’s added value. City, town, village, and school taxes still apply unless those jurisdictions adopt similar exemptions. Regional reporting has emphasized that point for homeowners considering the numbers. See coverage of the county vote for context.

What this means in Loudonville

Loudonville sits within the Town of Colonie, which controls local zoning and building permits. That matters because the county tax break does not change what you can build or who can live there. The Town of Colonie’s code requires owner‑occupancy and describes ADU occupancy as limited to individuals related to at least one owner‑occupant. The town treats ADU permissions as temporary under the posted code. You can review the current language in the Town of Colonie ADU provisions.

In short, you may be able to build an ADU and benefit from the county exemption, but renting to unrelated tenants could be restricted under current town rules. If the town amends its code or you secure a variance, your options could expand. Always confirm the latest zoning requirements with the town before you design or apply.

How to estimate your savings

Use this simple approach to gauge potential savings on the county share of taxes:

• Find the increase in assessed value tied to the ADU. The county exemption covers increases from $3,000 up to $200,000. You can estimate during planning or confirm after assessment.
• Identify the county tax rate on your bill or ask the Town/County tax office. The Town of Colonie tax office page is a good starting point.
• Multiply the county tax rate by the exempted added value, then apply the program’s percentage for the year. Years 1 through 5 are 100%, then 75%, 50%, 25%, 15%, and 5%.

Example for illustration only: If your ADU adds $50,000 in assessed value and the county rate is $10 per $1,000 of value, the county tax on that increase would be about $500 per year. With the exemption at 100% for the first five years, you would save roughly $500 per year during those years, then a smaller amount as the exemption phases down.

Keep in mind that counties often levy only a portion of your total bill. State data show that outside New York City, school districts typically levy the largest share of property taxes, while counties account for a smaller portion. You can review statewide distribution tables in New York’s property tax data to understand context for your estimate.

Who benefits most in Colonie and Loudonville

• Homeowners who can meet Town of Colonie’s ADU rules or secure a variance.
• Households planning to use the ADU for long‑term housing rather than short‑term stays.
• Owners adding between $3,000 and $200,000 in market value who want relief on the county share of taxes.
• Multigenerational households that may use an ADU for a relative, which aligns with the town’s posted occupancy rules.

Timeline and action plan

• Now through 2025: Track Town of Colonie discussions in case local ADU rules are updated. Review feasibility with the Building Department and begin design and cost estimates. Check the Town of Colonie ADU code section for current standards.
• Before you build: Apply for the required building and zoning permits. Confirm whether your proposed ADU type is allowed and what occupancy limits apply.
• After construction: Schedule final inspections, then coordinate with the Town Assessor so the added value appears on the assessment roll. Exemption applications are typically filed with your local assessor. See the state’s overview of property tax exemptions and forms and the Town of Colonie Assessor’s office for guidance.
• Program start: The county exemption takes effect January 1, 2026. Watch for Albany County guidance on any local forms, deadlines, or procedures linked to the ADU exemption. The county’s summary is here: Albany County announcement.

Other support you can explore

New York State’s Homes and Community Renewal agency runs the “Plus One ADU Program.” It offers grants and technical assistance to help create and upgrade ADUs, with a focus on low and moderate income homeowners. Learn more on the HCR Plus One ADU Program page.

Key limitations to note

• The exemption applies to the county portion of taxes on the added value only. Town, village, city, and school taxes still apply unless those jurisdictions opt in. See regional coverage of the county decision for details.
• Short‑term rentals are not eligible under the county law. Review the county announcement for the restriction.
• The added value cap is $200,000. Improvements beyond that amount do not receive additional county relief.
• Town of Colonie zoning rules, including owner‑occupancy and relative‑occupant limits, still govern how an ADU can be used. See the Town of Colonie code section.

Let’s talk about your property

If you are considering an ADU in Loudonville, we can help you think through value, resale, and timing so your plan fits both the market and the rules. For local guidance and a clear action plan, connect with Jamie M Mazuryk.

FAQs

When does Albany County’s ADU exemption start and how long does it last?

• The county states the exemption takes effect January 1, 2026, and covers the added value for 10 years at 100% for the first five years, then 75%, 50%, 25%, 15%, and 5% in years 6 through 10. See the county announcement.

Does the ADU tax break reduce my entire Loudonville tax bill?

• No. It typically applies only to the county portion of taxes on the ADU’s added value. Town, village, city, and school taxes still apply unless those jurisdictions adopt similar exemptions. Times Union coverage explains this.

Can I rent my Loudonville ADU to anyone and still qualify?

• The county excludes short‑term rentals, and Town of Colonie’s posted code restricts occupancy to relatives and requires owner‑occupancy. Check the Town of Colonie ADU code and confirm current rules with the town.

How do I apply for the ADU exemption when it opens?

• After permits, construction, and final inspection, coordinate with the assessor so the added value is on the roll, then file any required exemption form with the local assessor by the deadline. See the state’s exemption forms overview and the Town of Colonie Assessor.

What if my ADU adds more than $200,000 in value?

• The exemption only applies up to $200,000 in added market value. Any value above that cap is taxed normally at the county level. Review the county summary.

How big is the county portion of a typical tax bill?

• Statewide data show school districts often levy the largest share outside NYC, while counties account for a smaller share. Use the state property tax distribution tables for context and check your local bill for exact rates.