Home renovations can make your property tax go up—no matter how minimal they are. For instance, simply upgrading the shower in your already existing bathroom might raise your rates.

If you’re considering renovations or upgrades to your home, it pays to understand tax laws.

Keep reading to learn everything you need to know about how

home

improvements affect property taxes, with a little help from the car insurance super app

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Renovations can increase the value of your home

Improvements increase the value of your home. The more your home is worth, the more you pay in taxes. Period.

For example, a minor kitchen remodel can raise the resale value by more than $18,000, while a bathroom revamp can up it by over $12,000.

Of course, not all home improvements are created equal. Here are some home improvements that increase property value, and some that do not:

Home improvements that increase property tax

Home additions

Bathroom and kitchen renovations

Foundation renovations

Finishing a basement

Adding an in-ground swimming pool

Building a shed or other outbuilding

Converting an existing porch to a four-season room

Adding a new fireplace

Home improvements that don’t increase property tax

Repairing drywall, painting, or adding wallpaper

Replacing or refinishing a floor

Installing new kitchen cabinets

Removing a wall

Adding a patio or deck

Landscaping (except for adding fencing)

Replacing your roof

Key Takeaway As a good rule of thumb, ask yourself if the home improvement will cost you more than $5,000. If the answer is “yes,” it will likely cause an increase in your property taxes.

How do tax assessors find out about home improvements?

You may think that you can get away with home improvements unnoticed, but the tax assessor will find out. How?

Field assessments

As part of their job, the county tax assessor keeps track of every property in their district. One of the ways they do that is through field assessments.

A field assessment is when employees from the assessor’s office drive around, looking for changes. If something is clearly new, like the addition of a mother-in-law suite or a new sunroom, they may stop for a chat. Typically, they will stay outside unless you invite them in.

Building permits

Whenever you make significant improvements to your home, you should file for building permits. Field assessors monitor these permit requests and look for improvements that will alter the value of a home. Things that stand out usually include high-cost renovations and large-scale construction projects.

Comparable sale prices

Even if your bathroom upgrade didn't cause an increase in taxes upfront, they might go up sometime down the road. This is because tax assessors track home sales in their area and note prices.

If your neighbor's upgraded home sells above asking, your home's market value will also rise—and that means higher taxes.

MORE:

How to sell a house by owner

How to dispute property taxes

If you think your new tax assessment is unfair, you can fight it. Your appeal is based on the property value of your home, so you’ll need to prove that your home improvements did not increase resale value.

Invite the assessor for a walkthrough—and make sure to point out any deficiencies. Tax assessors usually only notice the good (like a new fireplace), but overlook items that may decrease a home’s value.

Look for an exemption. Some states and municipalities offer lower tax rates for veterans, people with disabilities, seniors, and agricultural properties.

File an appeal. This is a last-ditch effort, as you’ll have to hire a lawyer and shell out a lot of money, and there’s no guarantee that your tax rate will drop.

Pro tip If you want to fight a property tax assessment, take note of local laws. Most towns require you to file your dispute within a certain number of days after the judgment.

MORE:

How much does it cost to renovate a kitchen?

Do home improvements impact your home insurance?

Home improvements may impact homeowners insurance, depending on what they are.

In a nutshell, when you make renovations that raise the value of your home, you may no longer have enough insurance coverage to pay for damages and repairs. While adjusting your coverages may cause a higher premium, it’s well worth the cost.

Not sure what you’re covered for? Call your agent and ask for a review, or reach out to

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and chat with one of our knowledgeable representatives.

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FAQs

How much can property taxes go up in a year?

How much property taxes go up in a year depends on where you live and what kind of house you own. Still, as a general rule, taxes WILL go up in a hot housing market—and increases of 6% or more are not unheard of.

Is there a way to decrease property taxes?

You can’t do anything about your tax rate, however, you can appeal your home’s assessed value. If the tax assessor agrees that your home is valued at more than it’s worth, your taxes will, in turn, go down after the ruling.

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