There should be a gap, and there should be flashing (step flashing from when the roof was done) in that gap. The gap is to prevent the wood from wicking moisture. It also helps prevent any roof debris (leaves, catkins, etc) from getting snagged on the siding and junking up the transition. Debris can cause rot as well. It's not easy to make the clean-up cut. I've done it with a small battery powered circular saw, set to a depth slightly less than that of the siding. You do not want to cut into the flashing. I laid a length of wood on the shingles to act as a fence, or guide. I then ran the edge of the saw's baseplate up this piece of wood. It helped in maintaining a straight cut. I then cleaned up the cut with a utility knife. Again, be very careful regarding the flashing. And be careful up on the roof.

Would love to hear from anyone who used a white from the Hardie “dream collection”…I’m renovating a colonial and want a true white. The arctic white is very popular where I live and it definitely appears gray, especially next to white Azek trim and it’s not the e look I’m going for.

Thank you for the input PPF. I love the gable over the windows to the left in your rendering. It definitely ties that part of the house in to the dormer. I know the windows aren’t aligned in the original but my architect was more concerned with centering them on the interior walls than the outside. I’ll post the floor plan to show the dilemma there. The plan only shows 2 windows on the lower left but we changed it to 3 for the elevation. Moving the lower right window isn’t an option with the wall to the laundry where it is now. I could shift the picture window and the bank of 3 windows over but that would affect the dining and living room symmetry from the inside so I’m unsure. I did a very crude mockup with stone around the front door and agree that it’s not a good look. Leaning toward using the same color siding but with a cedar shingle style on the dormer and plank on the rest for a little variety.

@Johnson Brothers Contracting As @PPF stated, we have existing legal two bedrooms and 1 bathroom on the back of the house, they were built with the house. We are adding two additional legal bedrooms via a dormer to the front half of the upstairs. Its not a matter of not having the ability to get the the money to do it, I'm aware that we could, its a matter of what is a financially sound decision for our family. We will be doing the Dormer first, then HVAC, then siding the remainder of the house. Once the dust settles on the first two projects, we will likely have about half of the necessary funds to reside the rest of the house, and will take time to save the remaining half. Thanks for everyones input.