Another Tax Question on Home Addition

I know there have been a few questions with some great information regarding tax implications of a renovation or home alteration. We’re adding a small room addition of about 100sq feet to the back of our home. Is there any way to tell how much our property taxes would go up? It’s a 2 family currently used as a single family and we’ve filed for a “Alteration Type-2”. We’ve read about people’s taxes increasing 200% and if that’s the case I think we’ll just forgo the renovation. If our taxes were to jump that much we’d have to move somewhere else. It would be great if there were somewhere to go which would provide us with a best/worse case scenario of a tax increase. If anyone has done something similar to a 1-2 family home and had a huge tax increase please let us know.

nobikesonfance

in Renovation 8 years and 9 months ago

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nobikesonfance | 8 years and 9 months ago

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Very good information! Much appreciated. We applied for a permit for a 100 square foot extension and are in the process of working through DOB objections I estimated $125K on the permit. Right now our home is assessed at $19K. Using the formula you mentioned we’d end up with our taxes almost doubling. I’m hoping we can amend the final estimate value before the final permit is approved. Thanks again for your help.

brooklynmaterials | 8 years and 9 months ago

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I met this same problem before an ALT2 filing with no change of use and after weeks of searching for answers, I finally was able to speak to someone in the Tax Assessor’s office (which is no small feat since they don’t have an office you can visit or phone number or any way to contact them directly).
The person I spoke to said that they see the estimated renovation cost on your permit, they take off about 10% of that number for demolition cost, and then take what’s left and multiply it by 15% and that amount gets added to your assessed value. And then your new assessed value is multiplied by your tax rate and that should give you a pretty good idea of your new taxes. I asked if it was the estimated amount when filing or the final cost and if I recall she suggested they go by the initial filing– which seems crazy because that number can change so much once you get into the project.
I also spoke to some real estate tax lawyers and at least two of them also suggested this “15% of renovation cost” formula.
So as resident 2 suggested, a lower amount listed on your permit would mean a lower tax increase. I too was worried about the tax implications of my renovation since renovation costs are a one time hit but taxes are forever.

nobikesonfance | 8 years and 9 months ago

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Thanks. I just wish there was a way to get a ballpark figure before construction 🙂

resident2 | 8 years and 9 months ago

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Keep the construction cost number on the building permit as low as possible. Do not change the use. The increase should be minimal.