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Discussion Starter · #1 ·
Hello all. I've been lurking around this forum for a couple months and I first want to thank everyone for all the great information here.


I have a question about property tax increases after adding living space to your house. I want to finish about 700 square feet of my basement to include a bar/gameroom and, of course, an HT. I want to go the legal route and get a permit, but after talking to both the township and county tax assessor's office, I still really have no clue how much my property taxes will be raised. I've calculated it to be around $20-$30 a month, but that's not much more than an educated guess. And I've seen a couple posts from people mention outrageous hikes or cost per square foot assessments. So I'm curious to hear the numbers from anyone who has had an tax hike after adding an addition or basement rennovation. Thanks
 

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Well first let me say I did not pull permits nor do I think the finish of my basement impacted my taxes.


What you mention are two different things.

Finishing a basement unless it has direct outside access does not make it living space and as such only has a limited effect on propery taxes.


Adding an addition is clearly an increase in living space and would have a direct impact on the property tax.
 

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Discussion Starter · #3 ·
Here is what I know so far from talking to the township building inspector and county tax assessor: When I pull a permit I must provide a plan with square footage and cost estimate. The township is required to send these plans to the county tax office. Winthin 6 months after the final inspection the county will send out someone to assess the rennovation and my taxes will be raised accordingly. Even though its a basement its still considered additional living space.


My taxes will be raised my multiplying the 'value' of my rennovation by the current mill rate (23.548 currently) divided by 1000. The value of my rennovation is the tricky part. Its supposedly calculated based on the actual value that similiar rennovations have increased the property value in the area. I don't know how they can claim to accurately dertermine that number, but the tax office assured me that it will be lower than the actual cost of contracting the work out.


Anyway, I'm figuring about $25 per square foot. I have no idea if that's a reasonable number or not. But I hope so, because much more than that and it becomes a montly tax increase I'm not willing to pay.
 

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Hi Dave,


My taxes went up $50 per month for a 500 sq ft basement finish and that was just the theater and the bedroom/my office.


I could have gone without permits, but you never know, so I did it the right way. My realtor friend says I've increased the value by at least $50K just for the finishing.


Robert
 

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Hi Dave,


My taxes went up $50 per month for a 500 sq ft basement finish and that was just the theater and the bedroom/my office.


I could have gone without permits, but you never know, so I did it the right way. My realtor friend says I've increased the value by at least $50K just for the finishing.


Robert
 

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In my county, they up the ante further if you finish a bathroom or kitchen area.


I tried figuring out how much my renovation would cost in taxes, but ended up reaching the conclusion that no matter how I added it up, nothing could stop them from changing the rate or the assesment of my property value from year to year. Bottom line when it comes to taxes, I just accept that fact that I will get screwed.


So I've decided against pulling permits for my renovation. I am planning on having a family member who is a retired building inspector look over my work. I will also closely document with video each building phase so if I were to suffer some loss, I could prove to an insurance company that the loss was not due to shoddy workmanship in my renovation.


Good luck,


Gerry
 

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In my county, if you build a home theater, you are required to have two means of egress - Kind of hard to do (Cheaply) with a basement renovation. Also, around here, the assessed value on the addition/change is not based upon any DIY sweat equity and thrifty shoppping abilities, the full assessed value added to the home is based upon what it would cost to have a professional contractor do all of the work, and if the equipment were new.
 

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Here it's only 2 ways of egress for bedrooms. Found that out 2/3 of the way through sheetrocking and after not pulling a permit. Still, the taxes is the main reason. I had to pay $150 per year for a covered 4 section dog kennel in the back of the property. And they raised EVERYONE'S taxes this last year because they wanted more money for schools. I don't want to pay more taxes but I do have professionals (friends) checking my work. The only good thing I have heard is that the county is talking about cutting property taxes in half and raising sales tax. That would be fine by me. If they had done that sooner, then I probably would have gone the permit route.
 

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Discussion Starter · #9 ·
Thanks for the responses. I pretty sure I can meet all the building requirements. My basement is a walkout basement and my theater will have an egress window. Ceiling height is OK. I can cut into my existing HVAC system. Plus I met with the code inspector and talked over my plans with him. I just wish the county or township could say we expect a remodel would cause an increase of about x dollars. Seems like a reasonable thing to ask for. But Gerry is probably right, I'll get screwed no matter what. Has anyone called their insurance agent and asked about doing a rennovation without a permit?


Killer, based on my calculation it seems like you rennovation was assessed at about $50 per square foot. Does that seem high or about right to you?
 

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Here is Georgia the last Governor signed a bill to reduce the tax rate for all homeowners. I was so excited about getting a reduction. Then the bill came. The county inflated the value of my property and raised the milledge rate. I actually ending up spending more.


I read through my policy and it does not say that you must pull a permit for renovations. I havent gone so far as to call my agent, but I think I will before I break ground.
 

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Discussion Starter · #11 ·
I just checked my policy also. Nothing about permits, but I am required to notify my agent within 90 days of starting a rennovation costing, or adding value over $5000.
 

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If you want to talk about tax increase. Now I know why the California voters passed a limit on how much the tax could increase year after year.


In my county ...Fairfax Va, the regulation is to set the assessment at the "fair market value" . I've been in my house 8 years, with overall tax revenues slipping the county got more aggressive about valuation. I've had 20% increases for the last two years as the county is trying to catch up to "fair market"


The Good news is that the house values have actually gone up so there is a payoff at the end.
 

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The cap on taxes in California had to do with property taxes. Elderly folks, with homes fully paid off were losing their homes because counties would raise the property taxes without any real sense of valuation and the old folks couldn't pay their property taxes. In the late 1970's, Beautiful homes were being sold to politician's brother-in-laws for fractions of their value just to pay off the tax liens. It was dishonorable.


California's appetite for revenue is shamefully attrocious. The Prop 13 property tax cap comes under fire every election year. California has completely lost any sense of what the code and permits were intended for. The more we ask the government to do for us, the more they think we are helpless to do anything ourselves.
 

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Dave,


I'm not too far from you. I got my permit (last year) without the need for additional egress since it wasn't a bedroom (though we ultimately decided to put in Bilco doors/access after the permit was issued).


My tax assessor came to the door. We finished a 30x30' basement but only claimed the "usable space" as per recommendation (we installed some large closet spaces). She actually didn't come in to inspect but only asked questions.


I can't find how much our tax bill went up at the moment but it doesn't strike me as being overly expensive (especially compared to the "value" of the fun and movie ticket savings! :) )


Good luck!

Adam
 

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Discussion Starter · #15 ·
Thanks Adam. That's helpfull. By any chance is 'SE Pennsylvania' in Chester County?
 

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We are closing in our 400 sq. ft. garage and went the permit route. The assessed us at a standard rate of $44/sq. ft. Our bill went up $156 a year.
 

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I called my State Farm agent before I lifted one finger. He didn't care whether or not I had a permit to finish the basement. I specifically asked him the liability question too, and he still said it didn't matter to him. He did mention that I may want to have more contents coverage if I intended on buying tons of equipment and furniture (which I do!).
 

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One of my family members is a tax assessor for Montgomery county. Let me know what you would like your taxes changed to and consider it done ... ;)
 

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I did the inspection routine, got everything certified, taxes assessment done based on outsourcing the work and new equipment etc etc etc. I then started a small home business (presentation preparation, video dubbing etc) )which I use to write off the cost on my HT. You can get a depreciation refund on the equipment, based on the cost of new items, for things bought a tenth of the price. The tax man is paying me now...;). Hardware can be depreciated over 3 to 5 years, by that time close your business and start a new one to avoid the pain of audits.
 
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