Does Remodeling Increase Property Tax? What Taylor, Tx Homeowners Need to Know

When planning a remodeling project, homeowners often focus on the aesthetics, functionality, and overall value that the renovation will bring to their home. However, one factor that often goes unnoticed is the potential impact on property taxes. If you’re considering a remodel, it’s important to understand whether your home improvements will result in an increase in property taxes. At Fox Remodeling & Construction, we want to help you navigate this aspect of home remodeling so you can make informed decisions about your project.

How Property Taxes Are Calculated

Before we dive into how remodeling can impact your property tax, let’s take a look at how property taxes are generally calculated. Property taxes are based on the assessed value of your home, which is determined by your local tax assessor. The assessed value is typically based on the market value of the property, which can fluctuate depending on factors like location, the condition of the property, and the value of comparable homes in the area.

The tax assessor will evaluate your home periodically, usually every one to five years, to determine its value. If your home’s value increases due to improvements, your property taxes could rise as a result.

Does Remodeling Increase My Property Taxes?

The short answer is: It depends. Remodeling your home could lead to an increase in property taxes, but it’s not a certainty. Whether or not your remodel will increase your property taxes depends on several factors, including the scope of the project and how the local tax assessor views the improvements.

1) Type of Remodeling Project

Not all remodels will affect your property taxes in the same way. For example, cosmetic upgrades like new paint, landscaping, or replacing flooring are less likely to result in a significant increase in your home’s assessed value. These types of improvements typically don’t add much to the overall value of the home in the eyes of a tax assessor.

However, larger projects that add square footage, such as building an addition, finishing a basement, or adding a second story, are more likely to increase the value of your home. These types of remodels expand the usable living space of your home, which can lead to a higher assessed value.

Example:

• Kitchen remodels: A kitchen remodel, especially if it includes high-end appliances or custom finishes, can increase the appeal and value of your home, potentially impacting your property taxes.
• Room additions: Adding a new bedroom or bathroom could significantly increase your home’s square footage, which is likely to raise its market value and, in turn, increase property taxes.

2) Permits and Assessments

Another important factor in whether remodeling affects your property taxes is whether the project requires a permit. Many remodeling projects—especially those that involve structural changes or add square footage—require permits from your local municipality. Once you pull a permit for your project, the local tax assessor may become aware of the improvements you’re making and may reassess your home’s value.

When a remodeling project is complete, the tax assessor may increase the assessed value of your home based on the new improvements. This typically happens during the next reassessment cycle, but in some cases, reassessments can happen sooner if the assessor is notified of a permit.

Example:

If you’re adding a new deck or finishing your basement, the municipality may notify the tax assessor, leading to a property value reassessment. As a result, your property taxes could increase.

3) Local Property Tax Laws

Property tax laws vary by location, so it’s important to check with your local assessor’s office to understand how remodels are treated in your area. Some areas may allow homeowners to make certain improvements without triggering a reassessment. In contrast, others may reassess the property as soon as significant changes are made.

Some local governments also have special programs or exemptions that can reduce or delay property tax increases following home improvements. For example, some areas offer property tax abatements or caps for certain types of improvements or for specific income brackets.