ADUs in Denver: Rules, Costs and Whether It Pays

An accessory dwelling unit (ADU) — a small second home on a single-family lot, attached or detached — is now allowed on roughly 70 percent of Denver’s residential land, up from about 36 percent before the city’s citywide ADU rule change took effect December 16, 2024, according to the City and County of Denver’s Citywide ADUs page. Whether it pays depends on your lot, your goal — rental income, a place for family, or resale flexibility — and how the construction cost compares to what an addition of similar size would run. There is no single answer; there is a permitting path that’s more open than it was two years ago, and a cost-versus-return calculation worth doing before you commit.

Apollo builds ADUs and other additions through our home addition services; the rules below determine what’s possible on a given lot before design work starts.

What changed in Denver’s ADU rules, and when

Before the 2024 text amendment, ADUs were allowed only in specific zone districts — the “1-districts,” a set of zoning designations created solely to permit an accessory unit alongside the main house. Denver’s citywide ADU amendment folded that permission into every residential zone district instead of a carved-out subset, which is what pushed eligible land from roughly a third of the city to about seventy percent. The change took effect December 16, 2024, per the same official Denver Community Planning and Development source cited above. If you looked into an ADU on your property a few years ago and were told no, it’s worth checking again — the zone district that applies to your lot may now allow one.

The owner-occupancy requirement changed too

Colorado passed a state law in May 2024 (widely referred to by its bill number, HB24-1152) that limits how and when local governments can require an ADU owner to live on the property. To comply, Denver’s amendment now requires the owner to reside in either the primary residence or the ADU only at the time the permit application is submitted — not permanently afterward, according to the Denver CPD’s Citywide ADUs text amendment summary. Practically, that means an owner who later moves and rents out the primary house can typically keep the ADU rented as well, something the prior owner-occupancy rule would have blocked. If you’re weighing an ADU partly as a long-term rental asset rather than a place for family now, this change is the one that matters most.

Size, height and the review process — confirm your zone specifically

ADU size and height limits in Denver scale with the underlying zone district and lot size rather than applying one number citywide, and detached ADUs generally sit toward the rear of the lot with a lower height allowance than the primary house — Denver’s design standards describe more flexibility for two-story ADUs in denser, more urban zone districts and largely one-story ADUs in lower-density suburban ones. Because the specific square-footage and setback figures differ by zone district and were still being finalized in supporting design-standard documents at the time of writing, don’t rely on a number found online — Denver’s zoning lookup by address, available through the Community Planning and Development department, is the only reliable way to confirm what your specific lot allows before you design anything.

Utilities: shared or separate changes the cost picture

An ADU can run on the primary house’s utility meters or get its own separate electric, water and gas connections, and that decision affects both upfront cost and how the unit functions afterward. Separate metering costs more to install — a new utility tap and meter set is a real line item, not a formality — but it makes billing a tenant straightforward and is often expected by lenders or insurers if the ADU will be a long-term rental. Shared metering keeps upfront cost down and works fine for a family-use ADU where billing a separate occupant isn’t the point. Decide this early, since it affects the electrical panel sizing and the trenching plan for water and gas, both of which are far cheaper to design correctly the first time than to retrofit.

The permit and code path

Denver adopted the 2024 edition of the International Code family — including the residential and building codes — with city-specific amendments on June 13, 2025, per the City and County of Denver’s 2025 code adoption process page, and any permit submitted from that date forward is reviewed under the new code. An ADU permit runs through the same zoning-permit and building-permit sequence as any new detached structure or addition: zoning review to confirm the lot and design standards are met, then a building permit for the structure itself, then inspections at foundation, framing, rough mechanical/electrical/plumbing, and final. Fees are valuation-based, meaning they scale with the declared construction value of the project rather than a flat rate — build that into your budget conversation with your contractor rather than assuming a fixed permit line item.

Attached, detached, or converted: which type fits your lot

Denver’s rules allow three broad ADU types, and the right one depends more on the existing structure than on preference. A detached ADU — a standalone unit at the rear of the lot — works best on lots with enough usable rear yard to meet the design standards without crowding a garage or existing outbuilding. An attached ADU, built as an addition to the primary house with its own entrance, avoids the setback and rear-yard calculation entirely but adds to the main structure’s footprint and can be more disruptive to the existing home during construction. A basement or garage conversion is often the least expensive path since the structural shell already exists, but it still has to meet the same egress, ceiling height and life-safety requirements as any other basement living space — see our basement egress window guide if a conversion is the direction you’re considering, since a below-grade ADU bedroom needs a code-compliant escape opening just like any other bedroom.

Cost, and whether it pays

An ADU is, structurally, a small addition with its own kitchen and bathroom — which means cost per square foot runs on the higher end of addition pricing because of the added plumbing and electrical systems, not the framing. Rather than quote a number here that will be stale within a year of permit-fee and material-cost changes, see our Front Range home addition cost guide for current per-square-foot ranges and how kitchen and bath systems shift the total. Whether it pays depends on the goal: a rental ADU’s payoff depends on local rent levels and vacancy, which vary block to block and change with the market, so treat any rental-income projection a contractor hands you as an estimate to verify independently, not a guaranteed return. For a straight resale-value comparison between adding square footage and other project types, see our Colorado home additions ROI guide; and if the choice on your property is between an ADU-style addition and finishing an existing basement instead, our basement vs. addition value comparison covers that trade-off directly.

If your lot is outside Denver’s city limits

Everything above is specific to the City and County of Denver. Suburban Front Range cities and counties — Aurora, Lakewood, Arvada, Jefferson County, Douglas County and others — each run their own zoning code and ADU policy, and several have moved on their own timelines in response to the same 2024 state law. If your project sits outside Denver proper, treat the rules above as an example of the kind of change happening region-wide, and confirm your specific jurisdiction’s current ADU ordinance before assuming Denver’s size limits, parking rule or owner-occupancy timing apply to your address.

Apollo Construction builds additions and ADUs across the Denver metro and Front Range.