Home Remodeling Tips: How Much Will My Changes Affect My Property Taxes?

having more improvements than your neighbors will cause and increase in your property tax

Chances are you want to improve your home, but you do not want to pay higher property taxes. There is one rule to keep in mind when trying to minimize property tax increases while remodeling. It is "keep up with the Jones""¦ just barely.

Your neighbors may have made numerous improvements to their home, and in comparison, yours looks like a shack. It is only natural for you to make improvements as well. However, you need to remember that too many improvements to your home will raise your property value, which will in turn raise your taxes. While it is wise and responsible to make improvements on your home over time, if you exceed your neighbors' improvements, you may find yourself with an extra large tax bill next year. With tax increases calculated based on a percentage of the market value of your home, you will want to keep your perceived market value as low as possible.

One way to keep your perceived market value low is by doing most of your improvements on the inside of the home. Here are some improvements you can do that will not call too much attention from the tax assessor:

Replace or upgrade your flooring materials

Remodel your kitchen

Upgrade your bathrooms

Finish your attic or basement space

If your home was in dire need of any of these improvements like your kitchen literally falling apart, or it is time for a new roof, or paint job, then it is considered repair, not an improvement. Unless you are adding a high-end gourmet kitchen, or replacing an asphalt roof with a clay roof, it should not affect your tax bill.

Unless your neighbors have made the following improvements, it is best to avoid them, as your house will end up overpriced and over assessed:

New Deck

Swimming Pool

Concrete driveway

Professional Landscaping

In ground sprinklers

A home addition like a second story or family room

The reason it is acceptable to make large improvements if your neighbors already have them is simple. The value of your neighbor's house affects the value of your home. Even if you have the least expensive home in the neighborhood, your tax assessment will eventually rise if everyone else's does. So making the same improvements as everyone else will not hurt you.

Eventually, all improvements made to your home will be accounted for and cause in increase in your tax bill. Your home is assessed every few years in person, inside and out. Therefore, adding hard wood floors may not increase taxes right away, but they will be noticed eventually. The key is not to be too extravagant so that you will not be taxed more than your neighbor will.

If you feel that you have been overtaxed because the value of your neighbors' homes exceeds yours, you can always choose to challenge the assessment. Do not challenge it however, unless you know for sure that your home is worth less than the assessed value. Improvements the assessor did not know about can make your bill larger in the end.

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