Remodeling vs. Redecorating

• Changing out carpeting, repainting and adding new light fixtures to your basement qualifies as redecorating. You're not adding anything new to the basement, merely updating what's already there. This type of work shouldn't change your property value or your property taxes. Adding a new bathroom, erecting walls, or finishing out a previously unfinished basement do change the features of your home and increase its value to potential buyers.
  
  

Market Value

• Most tax authorities base property taxes on the market value of property. Tax assessors visit properties in person and review property records online to determine market values. Every state has a different timetable for computing property values. Some states refigure values every year, while others do this every other year. Depending on staffing in your area, if may take several years for the assessor to personally visit every property. If you renovate your basement and the assessor doesn't yet know about it, it won't be reflected on your valuation. However, assessors use building permits, utility permits and other records to track renovations, which could trigger a site inspection that would reveal your renovations.
  
  

Amount of Tax Increase

• If you're considering a basement renovation and want to know how much it likely to increase your property value, you can research property tax records in your area and compare the values on houses similar to your own, with and without finished basements. Many states and counties keep these records online. Or you can ask a local real estate agent for comparisons. Take the difference between the values of properties with and without finished basements and multiply this by your local property tax rate and you should arrive at a good estimate of your likely tax increase.
  
  

Other Considerations

• Consult your county building code before you begin a basement renovation. You may be tempted to forgo the proper building permits in order to keep your work a secret from the tax assessor. But if you plan to sell your home, unpermitted improvements could be an impediment to a sale. Also, if your tax assessor inspects your home and discovers unpermitted work you could be fined, or even made to tear out all the work you've done.