Ready to put your house on the market and show off all those updates you did? Thinking that the word “remodeled” sounds better than “updated” when advertising to prospective buyers? Hold on! There are important distinctions between the two terms, which can bring unexpected and unintended consequences if you’re not familiar with the differences.
Believe it or not, it’s the county tax appraiser who draws the line between a house that’s been updated vs. remodeled. An updated home has had only cosmetic changes. Doing things like replacing carpet, switching out hardware and light fixtures, and painting the walls all count as updates. But when you start replacing countertops and cabinets, installing showers and sinks, or doing anything else that requires a permit, then you’ve got a remodeled home. Consider the extent of the changes. Improvements costing $10,000 or more in one year or $25,000 over 5 years are typically seen as remodel projects especially if they require plumbing or electrical work. Put another way–changes that do more than replace the normal wear and tear of a home.
How These Terms Impact You
Say you’ve cleaned up your kitchen a bit. Ripped out that old linoleum, added a fresh coat of paint, and installed new fixtures. If you list your home and describe the kitchen as “remodeled,” you could face a county tax re-assessment that results in higher property taxes and potentially a bill for back taxes to the time you did the work. Yikes!
If you truly are making substantial remodels to that kitchen (or other area of the house), do your homework! Make sure those changes will add value to your home and not end up costing you more in the long run either with a future tax assessment or diminished return from the sale of your home.
Getting ready to sell and not sure which side of the line your improvements fall? We can help! Get in touch.