A basement apartment typically costs $80,000 to $150,000 while a garden suite runs $250,000 to $400,000 or more. We compare 2026 costs, rents and payback for Toronto homeowners.
For most Toronto homeowners, a basement apartment is the better first investment. A full basement conversion typically costs $80,000 to $150,000, while a new garden suite usually runs $250,000 to $400,000 or more once servicing and soft costs are counted. The garden suite earns higher rent, but not enough to close that gap for many years.
We build legal basement apartments across the GTA every week, and since Toronto opened the door to garden suites this question has come up in almost every consultation. Both are legitimate ways to add a rental unit to your property. They are just very different projects, with very different price tags, timelines and headaches. Here is how we walk our own clients through the decision.
A basement apartment is a self-contained unit inside the house you already own, with its own kitchen, bathroom and entrance. A garden suite is a separate small home built in your backyard. Under current provincial rules, most residential lots in Toronto and across the GTA can hold up to three units, meaning your main home, a suite inside it, and a garden or laneway suite. So this is not a forever decision between the two. It is a decision about which one to build first, and that usually comes down to money.
Converting an unfinished GTA basement into a legal second suite typically lands between $80,000 and $150,000 depending on size, finishes and how much mechanical work the house needs. That covers the fire separations, sound insulation, egress windows, kitchen, bathroom and electrical work that make the unit legal, not just finished. If your basement is already finished and you are legalizing it, the number is often far lower.
A private entrance is the piece people underestimate. We build walkout basement entrances for $15,000 to $25,000 all in, including permits and construction, and we priced that out in detail on our walkout entrance cost page.
Ceiling height is the other gatekeeper. The Building Code requires roughly 1.95 metres of clear height over the main living areas of a second suite. Older Toronto homes that fall short need underpinning or bench footings, which is real structural work in the $60,000 to $120,000 range for a full perimeter. We published those numbers on our underpinning cost page, and our structural team handles that work in house. Plenty of GTA basements need no underpinning at all, which is exactly why the first site visit matters.
Toronto caps a garden suite at the lesser of 40 percent of your rear yard or 60 square metres, which is about 645 square feet. Recent bylaw updates have relaxed some of the early design rules, including the old angular plane requirement, so flat roofed designs are now possible on many lots.
Construction in the GTA generally runs $250 to $400 per square foot and up. Before a shovel touches the ground, budget for engineering drawings, arborist reports and utility connections, which commonly add $25,000 to $70,000 in soft costs, because the new building needs its own water, sewer and electrical service trenched across your yard. Realistic all-in budgets for a livable one or two bedroom garden suite sit between $250,000 and $400,000, and it is not hard to pass that with premium finishes or difficult site access.
A legal one bedroom basement apartment in Toronto currently rents for about $1,400 to $2,400 a month, with well finished suites in central neighbourhoods pushing toward $2,600. Garden suites do earn more. A one bedroom typically brings $2,500 to $3,000, and a two bedroom layout can reach $3,500.
Now run the payback. Spend $110,000 on a basement conversion renting at $1,900 and the gross rent covers the build in under five years. Spend $350,000 on a garden suite renting at $2,800 and you are waiting more than ten years before the rent has covered construction, and that is before property tax, insurance and vacancy. The extra $700 to $1,000 a month a garden suite earns is real, but it comes attached to an extra $200,000 or more of upfront cost. We broke down the income side in our guide to basement apartment rental income in the GTA.
You will still find blogs promoting an $80,000 federal secondary suite loan at 2 percent interest. Be careful with that one. The program was announced in late 2024, never opened for applications, and the federal government confirmed in its 2025 budget that it will not go ahead. What does exist is insured mortgage refinancing that lets homeowners access up to 90 percent of the post-renovation value of their home to fund a legal unit. Talk to your mortgage broker about current options before you set a budget, and treat any article still advertising the $80,000 loan as out of date.
We are a basement company, so you might expect us to dismiss garden suites. We will not, because for some properties they are the right call. A garden suite leaves your basement free for your own family, gives the tenant a fully detached home with no shared walls or ceilings, commands premium rent, and suits multigenerational setups where parents want their own front door. If you have a deep lot, comfortable access, and the budget to carry a project of this size, it is a legitimate long term play. The trade-off is simple. A basement suite converts space you already own and already heat. A garden suite means constructing an entire small building from foundation to roof.
Build the basement apartment first. It costs a third as much, it is finished in a couple of months instead of the better part of a year, and the rent it produces can quietly fund the garden suite later if you still want one. That is the sequence we recommend to investors and families alike, and the three unit rules mean nothing stops you from doing both over time. Our legal basement apartment service covers the full path, including design, permits, construction and inspections.
No. It was announced in late 2024 but never launched, and the 2025 federal budget confirmed the program is not going ahead. Insured refinancing of up to 90 percent of your home's post-renovation value is the main federal tool currently available for adding a suite.
Yes. Most residential lots in Toronto and much of the GTA can now hold up to three units, so many owners build the basement suite first and use the rental income to work toward a garden suite later.
Roughly 1.95 metres of clear height over the main living areas. If your basement falls short, underpinning or bench footings can create the height, typically at $60,000 to $120,000 for a full perimeter.
A basement conversion typically spends about two to three months in construction once permits are issued. A garden suite usually takes six to twelve months from design through permits, servicing and construction.
If you are weighing the two options for your own property, start with a conversation. We offer a free in-home consultation and free 3D design, we quote with itemized locked pricing so the number you sign is the number you pay, and we back every schedule with a $200 per day on-time guarantee. Book your free consultation or call us at (647) 620-6601 and we will tell you honestly which unit your property is best suited for.
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