13 Home Upgrades That Increase Your Tax Burden

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Owning a home is the American dream, but let’s be honest, it can sometimes feel like we’re playing whack-a-mole with the dream. You fix one thing and five more come along. Upgrades can make your home cozier, sleeker or even smarter, sometimes at a hidden cost. Yes, you’ll see those costs in your budget at first, but the real walloping may be to your property taxes.

Here’s the deal: Your home’s assessed value is the basis for most of your property taxes. That means every shiny new addition or high tech upgrade could send that value—and your tax bill—up. Before you start dreaming of a backyard oasis or the ultimate kitchen makeover, let’s chat about the changes that might cost your wallet a little.

Swimming Pools

Having a sparkling pool can seem like the ideal way to make summers unforgettable, but it also means your property is unforgettable—by your local tax assessors. A pool can add a lot of value to a home, but that also means a higher assessment and a bigger tax bill. On top of that, pools come with their own ongoing expenses, so it’s not just a one splurge.

Home Additions

Are you considering adding a new bedroom, a sunroom or second story? Congratulations, you’re now adding square footage and your taxes. Extra living space is something that tax assessors love because it’s a simple way to increase the value of a home. Remember that your tax bill will also increase if you’re building for additional room or rentable income.

High-End Kitchen Renovations

You might get a pat on the back for upgrading your kitchen at dinner parties, but your local assessor might come knocking. Fancy countertops, custom cabinetry, and professional grade appliances add real value to your home. Kitchen remodels often yield a return on investment according to the National Association of Realtors, but they can also mean a higher tax burden.

Solar Panels

Although solar energy is a win for the environment and your electric bill, it’s not always a tax free win for homeowners. Some states allow your property value to go up with the addition of solar panels, and that can mean higher taxes. But some places give tax breaks to counteract this, so it pays to look into local policy.

Finished Basements

21 Genius Home Upgrades That Could Skyrocket Your Property Value — Image Credit: Do Huy Hoang/Pexels

What better way to turn a basement into livable space than to find treasure in your own home? A finished basement adds value to your home whether it’s a game room, gym or rental apartment. But here’s the rub: Because it’s no longer just a storage area, your tax bill will likely reflect that upgrade.

Luxury Bathrooms

What about a spa like bathroom? Amazing. A punch in the gut tax bill? Less amazing. Renovations such as heated floors, rainfall showerheads or whirlpool tubs can really jack up the value of your home—even your taxes. These upgrades are fun but they’re also a signal that your home is worth more.

Landscaping Overhauls

Elaborate landscaping can also raise your property value, even if that manicured lawn and koi pond makes you the envy of the neighborhood. Landscaping can raise home values by as much as 12 percent, according to a Virginia Tech study. But be prepared for your property taxes to blossom too.

Home Offices

As remote work becomes the standard for many, adding a home office has become a popular upgrade. Expanding your home’s footprint or building a dedicated space, could raise the taxable value of your property. Productivity wise it’s great investment but not necessarily for keeping your taxes low.

Detached Structures

The stuff of dreams for hobbyists is a shed, workshop or detached garage. Unfortunately, they are also music to a tax assessor’s ears. A new building on your site, even if it’s not attached directly to your home, adds to its value.

Smart Home Technology

Automated lighting, security systems, and smart thermostats are all impressive high tech upgrades. They won’t make a huge difference on your tax bill individually, but tied up with other upgrades, they can be the difference. Modern tech has begun to become a factor in property assessments for local governments.

Expensive Flooring

DIY Home Renovation Ideas Under $5000 — Photo Credit: Flickr

Hardwood or even installing high end tile can make a room, but it also adds value that the assessors are going to notice. Yes, your shiny new flooring may last for decades, but do remember that its aesthetic appeal will probably cause your taxes to go up sooner than you’d like.

Energy-Efficient Windows

Smart Strategies to Safeguard Your Home from Intruders" — Image Credits: Ksenia Chernaya via Pexels

Drafty windows can be replaced with energy efficient models which can reduce your heating and cooling bills, plus the new windows can improve the assessed value of your home. Many energy saving upgrades are touted as cost effective in the long run, but they aren’t always a friend to your property taxes.

Garage Conversions

Turning your garage into living space is a great way to add a bedroom or even a rental unit. But almost always, losing the garage and adding square footage to the property will mean your taxable value will go up. For your home’s worth, this is a win for tax assessors and their revenue.

Disclaimer: This list is solely the author’s opinion based on research and publicly available information.