Metzger, a Democrat, signed the original property tax exemption law in April, but not without saying she wanted to make a change. The original law grants county residents a real property tax exemption on the portion of their increased property value resulting from the construction an ADU. Also called “guest cottages” or “in-law suites,” ADUs are small, self-contained residential units located on the same property as a primary residence.
Metzger says the point of the exemption was to encourage more ADUs to be built across the county — but before the exemption passed in April, the county legislature removed language that would have prevented the tax-exempted ADUs from being used a short-term rentals.
The amendment passed by the legislature last month puts that language back in.
“The property owners who are building ADUs to use it for a short-term rental, they can’t take advantage of the tax incentive, because the whole purpose of our support for ADUs is really to address the housing crisis and expand our stock of affordable housing," says Metzger.
New York, like much of the country, is grappling with a housing shortage that is driving up rents and housing costs. In the Hudson Valley specifically, the latest “Out of Reach” report by Hudson Valley Pattern for Progress finds housing costs continue to rise faster than wages. From 2020 through 2025, the gap steadily widened in all nine Hudson Valley counties. Ulster’s gap increased by 59 percent.
In 2024, New York changed its tax code to allow counties to grant tax breaks to ADUs. Ulster County isn’t the only county to get on board: Albany County passed its own law creating a partial property tax exemption for ADUs on Monday. Metzger says cities and towns can also opt in, but so far, she says Kingston is the only municipality in Ulster County to do so.
“Now that the county has adopted it, that will hopefully help and we will be actively encouraging municipalities to do that," Metzger adds.
Metzger says ADUs are some of the fastest and cheapest types of housing to build, and Ulster County is going all-in on them. Communities like Kingston have amended zoning codes in recent years to clear any potential hurdles for property owners. Kingston also has its own permit-ready ADU design that residents can use.
Metzger says the county is also preparing to open a third round of grant funding in its Plus One Program, which offers grants of more than $100,000 to homeowners who need help with construction costs.
“They have to be at or below the area median income to qualify, and they have to agree to rent the ADU at an affordable rent for 10 years," she explains. "That program’s been very successful. We’ve given 50 grants so far, and the projects are at various stages.”
Ulster County’s tax exemption for ADUs is capped at $200,000. It lasts for five years, and gradually decreases every year after that. Albany County’s tax exemption, which takes effect next year, does the same – and it also restricts qualifying ADUs from being used as vacation rentals or Airbnbs.
Democratic Ulster County Legislator Abe Uchitelle says the restriction was initially left out of the Ulster County law because there were concerns over whether the language was too strong, or whether it would clash with the New York tax code.
“Some of our colleagues and our counsel was concerned about its alignment with state law," he explains. "We had some questions about it, and opted to go ahead and pass the law without that language while we sort out the additional details.”
The legislature passed the amendment 19-4 on July 15.
“I did have some colleagues this time around who felt that it placed an undue bias in favor of long-term rentals to the detriment of short-term rentals, and my response to that is: that’s exactly what we’re trying to do," he notes. "We don’t want short-term rentals. We want long-term affordable housing. And any tax exemption should only go in that direction.”
Metzger maintains the point of New York’s code change was to incentivize the construction of permanent housing. She doesn’t foresee any clashes going forward.
“Short-term rentals, they definitely have their place," Metzger says. "But when they are making up 10 percent of your housing stock, that is a real problem.”
