You have a finished basement and wonder if it counts in your home’s appraised value, the county’s assessment, or affects how potential buyers look at your home.
In general terms, the finished basement doesn’t count toward your home’s square footage, but that doesn’t mean it’s a lost cause. A finished basement can provide plenty of value, both financial and non-financial to a home. Below-grade (underground) basements typically don’t affect a home’s square footage, but certain conditions may allow your state to consider it as livable space.
The Factors Making a Basement Livable Space
If you live in a state that allows appraisers and assessors to use the basement in its square footage, it must include:
- A separate door for entry and exit
- Any bedrooms must have at least one window measuring at least 24” wide and 36” high
- All bedrooms must have proper lighting and ventilation
Again, most states don’t allow the inclusion of basement square footage in a home’s measurements. However, you can include it in your listing as ‘below grade’ square footage. This lets buyers know there is standard ‘above grade’ square footage as well as a finished basement. Many buyers prefer a finished basement and look for this in a listing.
How to Figure Out Your Basement’s Square Footage
You may wonder just how much square footage your basement adds to your home. Use the following steps to figure it out:
- Measure the length and width of the basement to the nearest six inches
- Multiply each area of the basement’s measurements (length x width)
- Add up the measurements for total square footage
Does a Finished Basement Add Value to the House?
In general, your finished basement won’t add to the official home’s appraised value. Most mortgage programs only allow appraisers to value the ‘above grade’ living space. There is, however, a space on the standard appraisal form where appraisers can value the ‘below grade’ areas, it may not factor into the home’s total value, though.
Where a finished basement does add to a home’s value, though, is in the home’s selling price. Many buyers want a finished basement and will pay more for a home that has one. While you can’t advertise the home including the basement square footage, you can advertise it as a separate area, such as a man-cave or craft room. This often grabs the attention of potential buyers. While buyers can only pay as much as the home’s actual value, you’ll likely get higher bids on a home with a finished basement versus one with an unfinished basement.
Does a Finished Basement Increase Your Property Taxes?
Even though a finished basement may not affect the market value of your home, it may affect your property taxes. Depending on your location, your assessor may include the new livable space in your home’s assessment. When the assessor multiples your assessed value by the local tax rate, you’ll pay more taxes.
Why Doesn’t a Basement Count in the Home’s Square Footage?
You may wonder why your finished basement wouldn’t double the living space of your home. After all, it’s an additional level with bedrooms and living space. You may even have a bathroom. But it doesn’t count if it’s not above ground level. This is due to many reasons, but the most common are:
- The below-grade level improvements cost less than above grade level improvements
- The walls and floor are often made of concrete rather than drywall and standard wood
- There are more potential issues that may occur below grade level
Your basement may not technically count toward your home’s square footage, but don’t discount it as a possibility in helping your home’s value when selling it. If you can gain value from a finished basement while you live there, you may also see financial reward when you sell the home, it just may not be in the traditional home’s market value or even in your assessed value.