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How Does an Addition Affect My Property Value & Taxes?

Building onto your property is one of the most effective ways to create the increased room your family needs—especially if your current neighborhood is conveniently located near all your favorite amenities. Of course, the new square footage affects your property value and taxes too, be sure to take that into consideration.

Here’s what to keep in mind as you build an addition—and how to plan for the budgetary effects so you can relax and enjoy your expanded home.

How Your Property Value and Taxes Are Determined

While all home improvements have some impact on a fair asking price in a sale, they don’t all affect your property value to the same degree. Adding new tile to your bathroom floor will make it look nicer—but it won’t affect your taxes.

In a nutshell, your property value is determined by your local tax assessor’s office—and they are concerned about issues such as square footage. When you invest in a home addition, you are creating more living space, which improves your lifestyle. But because of that added footage, your property’s assessed value will eventually increase—and so will your tax bill.

How soon will my addition affect my property value and taxes? 

The short answer is—it depends. Every municipality handles things a little differently. The drawings for your addition are provided to the township at the time of permitting and are on record after the project has ended. If your tax assessor processes that paperwork quickly, you may see the effects on your taxes right away. If your area is slower to update its records, you may wait a while before seeing that tax bump. 

You should expect an increase at some point, however. The additional space you’re building adds value to your house, and your town or city will desire to tax that.

Can you guesstimate the effect my addition will have on my taxes? 

We sure wish we could! Unfortunately, this is something that depends entirely on your local tax assessor’s office. They will decide your home’s updated value based on factors such as comparable houses in your neighborhood and what you’ve opted to include in your addition.

Will the type of addition I choose affect my property assessment? 

Yes—and some additions add more value than others. If you build a new kitchen and two more bedrooms with bathrooms included, you’ll increase how many people can live there comfortably. That boosts value more significantly than if you only build a small family room or turn a half bath into a full one.

How can I tell if an addition is worth the increase in my property taxes? 

This is a decision only you can make, but you can gain clarity by asking yourself questions like these:

  • How much would it cost to get into a new house that perfectly fits your needs? The numbers may offset each other.
  • How long do you plan to remain in your current home? If the answer is several years, renovations will make your space more livable, and you’ll spread your investment out over time.
  • How will the new space benefit you? Large add-ons can give you needed space for a home office, gym, mother-in-law suite, or other essential conveniences.

While paying more in taxes can feel unpleasant, the additional boost to your investment in your home creates many benefits

  • Your property is worth more—especially if you build a second floor or add on new bedrooms. 
  • You can borrow more against it (should you choose to do so). 
  • You can set a higher asking price when you sell it. 

That makes the investment worthwhile for many homeowners.

Expect an Increase—and Budget It In 

When you build an addition, know that you will see an increase in both your property value and your taxes at some point. Our advice is that you should go into your addition project expecting a tax increase and plan for it. Reach out to your tax assessor’s office if you want to learn more.

Enjoy Luxurious Added Space for Your Pittsburgh Area Home

Why wait any longer to get the increased satisfaction of having a house that fits your family’s lifestyle to the fullest? At Action Builders, we listen closely to your goals and help you realize your vision—so you can love your Pittsburgh area home even more!

Learn more about our home addition services.