Replacing sending unit- how low does the tank need to be???

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No you don't.....I have one too below in my house (cape cod) and that is the problem with them....all the fumes of "working on the car" go right upstairs into the house.....not too mention that when you start them up all the fumes go right upstairs.....so I have to start them up and run them right outside to let them warm up....just a pain in the ***.....better off with a detached garage.....The only advantages to a garage under the house is less chance of theft and also going right into your car from your warm house is nice in the winter

Agreed.
The negatives to a downstairs garage are many and significant. fact that it's heated and convenient is an absolutely joy. I'm a pretty slow/mistake-prone mechanic and if I didn't have the luxury of winter months to fart around and take my time, my car would never be on the road! :D

Otherwise, it's mostly problems. In addition to the the fumes, there's always the thought of a fire risk...and the fact that the ceiling is pretty low (at least in my garage) is a significant problem too.

It really is amazing how much exhaust comes out of an idling SB V8 (with no catalytic converter) in just the few moments of pulling it into the bay.