# Tax benefits for basement remodel?



## miked918 (Apr 3, 2007)

I've heard that there is no additional property tax assessed when you remodel your basement, like there would be if you add an addition.

I know it's true in Michigan (where I live), but haven't found if it's generally true nationwide. (Need the info for a work research project.)

I've Googled and have Yahoo'd, but am not finding any source to help.
Any way you can point me would be greatly appreciated.
Thanks.
Mike


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## KUIPORNG (Jan 11, 2006)

there is additional tax in Toronto...


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## yummy mummy (Sep 11, 2006)

Oh, yes, certainly in Toronto.


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## jcrampton (Mar 28, 2007)

*tax assessment*

In Missouri, the assessor's statement shows total floor area of the home (usually the finished area when built), then the basement area, then another section for finished area. For my house the three boxes are 1034, 1320, 0. I assume when I finish the basement the 0 will turn into 1320, but I'm not certain. I think "finished areas" aren't taxed the same way as total floor area.

Contact your county assessor's office for more detail.


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## KUIPORNG (Jan 11, 2006)

in Toronto, it use values of the place rather than area for taxation.... for basement, it probably add 10,000 to 20,000 to the value of the home for taxation.... I will think if they use area... it is kind of 30% more tax and that is way too much....


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## yummy mummy (Sep 11, 2006)

You are definitely right Kuiporng.
It is the value that brings the property taxes up.
Including the added "value" that a finished basement would add.


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## AtlanticWBConst. (May 12, 2006)

yummy mummy said:


> You are definitely right Kuiporng.
> It is the value that brings the property taxes up.
> Including the added "value" that a finished basement would add.


I think I will park a few broken down cars on my front lawn.....:wink:


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## yummy mummy (Sep 11, 2006)

AtlanticWBConst. said:


> I think I will park a few broken down cars on my front lawn.....:wink:


 

If it would help lower my property taxes, I would park 10 of them on my front lawn. :wink:


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## bjstewa (Feb 23, 2007)

miked918 said:


> I've heard that there is no additional property tax assessed when you remodel your basement, like there would be if you add an addition.
> 
> I know it's true in Michigan (where I live), but haven't found if it's generally true nationwide. (Need the info for a work research project.)
> 
> ...


I'm sure it varies greatly by where you live, but I live in Wisc. and we are automatically re-assessed by the estimated cost of the project being added to our current property tax assessment. Because they use cost (vs. value added to the property) it is a great benefit to being a DIY'er.

For example, I am in the middle of a basement remodel project and I am saving 15-20k by doing it myself. If I paid someone to do the work my taxes would go up by about $600/yr as opposed to the $100/yr increase I am expecting.

Ben


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## handy man88 (Jan 23, 2007)

bjstewa said:


> I'm sure it varies greatly by where you live, but I live in Wisc. and we are automatically re-assessed by the estimated cost of the project being added to our current property tax assessment. Because they use cost (vs. value added to the property) it is a great benefit to being a DIY'er.
> 
> For example, I am in the middle of a basement remodel project and I am saving 15-20k by doing it myself. If I paid someone to do the work my taxes would go up by about $600/yr as opposed to the $100/yr increase I am expecting.
> 
> Ben


There are opportunity costs associated with finishing it yourself though, such as time away from other activities and time before being able to enjoy the basement. The saying usually is a certain percentage of the money saved is usually needed to pay for therapy or x months off your life span. Doing home projects is fun, but it takes away from other things.


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## sleepy23 (May 7, 2007)

you guys dont actually report upgrades and additions do you? I mean if you do something big that requires additional insurance..i can see that, but i never invite the tax man over for a look around my house.


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## AtlanticWBConst. (May 12, 2006)

sleepy23 said:


> you guys dont actually report upgrades and additions do you? I mean if you do something big that requires additional insurance..i can see that, but i never invite the tax man over for a look around my house.


What if...... the IRS is watching ............the internet????


 ................


You just sent out your invitation.............:wink:


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## Zero Punch (Nov 15, 2005)

sleepy23 said:


> you guys dont actually report upgrades and additions do you? I mean if you do something big that requires additional insurance..i can see that, but i never invite the tax man over for a look around my house.


If you need to pull permits they know.


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## J187 (May 19, 2006)

I'm still strugling to see how its a tax "benefit" I'd better describe it as a tax slap in the face :biggrin:


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## AtlanticWBConst. (May 12, 2006)

J187 said:


> I'm still strugling to see how its a tax "benefit" I'd better describe it as a tax slap in the face :biggrin:


I don't believe there is inherently any real tax benefit, other than any energy savings write offs that may come of it.
i.e. - New energy efficient windows & additional insulation.


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## handy man88 (Jan 23, 2007)

An obvious tax benefit is when you sell the house. You can add the cost of refinishing the basement, or the value of it, to the cost basis of the house.


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## sleepy23 (May 7, 2007)

i guess i might want to possibly think about doing some research on what i need a permit for....
i know several ppl that have done basement remodels ranging from a couple of thousand to 40-50k and none of them got permits for anything.

other than insurance reasons, why would i want to report my renovations ( i am seriously asking this)?


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## AtlanticWBConst. (May 12, 2006)

sleepy23 said:


> i guess i might want to possibly think about doing some research on what i need a permit for....
> i know several ppl that have done basement remodels ranging from a couple of thousand to 40-50k and none of them got permits for anything.
> 
> other than insurance reasons, why would i want to report my renovations ( i am seriously asking this)?


1.) Because it is the law in just about every US area. 

2.) By having an experienced and 'usually' qualified inspector examine all the work that is being done by the contractors you hire, you are getting someone who your tax dollars pay, to inspect and make sure that the work is being done properly, and that you, your home, and your family will be safe.
If you have a question about anything, all you have to do is call and ask the inspector.

3.) It is a system that protects others: When a house goes up for sale. How do you know if there was work done on it, and that it was done properly and done safely (i.e. - electrical, structural)?
With permits, you can check records to make sure that there was not work done that has actually damaged the house. Truthfully, we have worked in homes that were severaly damaged and comprimised by previous owners doing work on them (without permits). If you own a home, put it on the market, and list that the basement was 'remodeled', or a room 'added-on', and then the other party goes to the town hall to check on the permit and there is none.....Now, not only does this person know, the town now knows.

4.) Neighbors have eyes.....and those neighbors like to tell the town.
Years ago, we started off repairing a deck, and then ended up having to rebuild an area of it and add onto it. Right before we were able to apply for a permit (Because the job grew so quickly), a neighbor called inspectional services. 
Why, because the couple who's house we were working on, had called to complain about their 'barking' dog the previous year. It was 'tit' for tat'. Ultimately we had no problem with the inspector, he knew us, and understood the situation completely.

(Also - Neighbors may even call simply out of Jealousy)

Always do things legitimately and by code requirements and you will save yourselves alot of headaches.


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## KUIPORNG (Jan 11, 2006)

One main reason is I can think of: if someone put an offer in a purchase of a home.... then want to back out after a month or so... one way may be they check any illegal stuff in the house... find one... may be they can use that as a reason to back out... so may be as a homeowner... when you want to have peace of mind when selling the house... this is a good reason to get permits on everything....


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