Home Improvements That Could Boost Your Property Tax Bill:
Get the lowdown on how home improvements affect your property taxes, lest you're caught off guard when the bill comes knocking!
Property taxes can vary like a chameleon across the United States—from the priciest average in Essex County, New Jersey ($13,145) to the wallet-friendly West Virginia ($989). But one thing's for sure: nobody escapes paying these bad boys—even if you renovate your home.
Now, when you give your house a makeover, chances are your property taxes will follow suit. Why, you ask? Simple—improvements increase your home's value, and property taxes are based on—you guessed it—value.
So, what renovations will slap you with the heftiest tax bill? Here's a rundown:
- Building a bungalow addition: Nifty additions to your home that swell the livable space will send your property's value soaring. This can include other renovations that tack on extra space as well, like turning a garage into a bedroom or office, or splitting a bedroom in two. Even adding funky little outbuildings might raise your tax bill—especially if they're on a foundation and hooked up to water, electric, and sewer lines.
- Creating bathroom bliss: Such is life—more bathrooms usually means a home is worth more, so adding one to your humble abode is bound to cost you more in taxes. Even updating your existing bathrooms to make them fancier schmancier might trigger a property tax increase, as many assessments gauge general value by the number of fixtures in the crapper.
- Installing an in-ground pool: Controversial in terms of home value (they can even drop your sale price), but they'll still ramp up your property value because duh, they're an improvement. The catch? They're considered real property, not just personal property (and luxuries, no less), since they're attached to the home. An above-ground pool, however, probably won't impact your tax bills.
- Decking out your patio or deck: A dapper deck or cozy patio makes your outdoor living spaces more snazzy, which means they'll likely add to your tax bill, depending on your local tax codes, the size and scope of your new outdoor area, and the materials you use.
- Finishing your basement: If your basement's all gloomy and gothic, transforming it into an entertainer's paradise will definitely up your property taxes. Remember, a finished basement usually offers a 70% return on investment, so if your basement costs the average $32,000 to finish, your home should gain $22,400 in value, tax bills included.
- General land improvements: Bee-tee-dubs, don't only think about improving the house itself! Slapping up a fancy fence, paving your gravel or dirt driveway, installing irrigation systems, landscaping and hardscaping, adding outdoor lighting, regrading, or even dropping sidewalks all increase the property's worth, and could bring some serious property tax hikes.
- Burning your dollars away with a fireplace: A fireplace not just adds warmth to your crib, but value too. Homes with fireplaces typically sell for 13% more than comparable abodes, so expect the added value to reflect in your taxes.
Before you embark on any home improvement adventure, remember to call your local assessor's office. They won't give you an exact number, but they can clue you in on whether your project will ratchet up your tax bill, and give you a rough idea of how steep the increase might be.
In Virginia, where property taxes can be significantly higher compared to West Virginia, renovating your home may lead to an increase in property tax assessments. For instance, adding a bungalow addition or a bathroom to your home could significantly increase your property value and possibly your property taxes. Therefore, it's essential to consult with your local assessor's office before starting any home renovation project to understand the potential impact on your property taxes.
