A Basement Thread (building permit, value)

[indataform]

Seeing that someone else had inquired about building a basement, I thought I would ask the following questions for my own project...

I know this is a sensitive issue. But how many people who've built their basements actually applied for a permit first? Is it common for people to just go ahead and build their basement without one?

Secondly, in the past many realtor's have told me that a finished basement didn't add much if anything to the sale price of the home but it did help to make the sale of the home easier. Is this true?

[BuildingHomes]

Let's clarify first.. Building a basement would make it sound as if you had nothing under the first floor already and that you would have to dig it out.

Finishing a basement presumes you have one already and will be finishing it as a living space.

You should get a permit. Otherwise you are liable for any issues relating to how you finished the basement even after you sell it.

A house 'caught fire' just down the street from me a couple of weeks ago. It had an illegally finished basement that was being rented out. No one was hurt, but the owner of the property is now in a whole lot of trouble for an illegal renovation (including plumbing, electrical, etc), property tax evasion, and an illegal appartment.

The advantage to permits is the inspections. It will be inspected to make sure it is code compliant. That means you have done it right and won't have any problems with insurance if anything bad happens.

[hotgo]

While people "should" get a permit for finishing their basement, I am certain that most people do NOT get permits. Even when paying someone to finish your basement, most contractors do not get the permits in place.

Nobody is going to say that it's better to not have a permit. Of course having a permit is the right thing. But in practice, you'll find that very few do indeed get one.

The above conclusion is based on my experience. I just finished my basement, and I did not get a permit to do so. There was plumbing, wiring, etc. but I chose to just do it versus worrying about the paperwork. Wrong yes, but the right choice in my eyes. My neighbor hired a contactor to do it for him, and the contractor nor my neighbor got a permit.

[mart242]

I got a permit for my last basement and will get one for my new house as well. The way I see it: even if you do a good job you'll be in deep shi.. if the house burns down because of a fire in the basement (I'm sure they could refuse to pay) and it could make selling the house a lot more difficult. I'd never buy a house where the basement was finished without permit.

Obtaining a permit is easy and the city is helpful in most cases when they review / inspect them. They are not there to cause problems, they want to avoid them in the first place.

And yes, finishing a basement won't add value to the house, it will just help selling it.

[patrob]

And yes, finishing a basement won't add value to the house, it will just help selling it.

Of course it will add value to the house, sure some people might have diff. ideas on how they would have done the layout & those people might prefer a house without a finished basement. But it still adds some value IMO.

[sunnybono]

Let's clarify first.. Building a basement would make it sound as if you had nothing under the first floor already and that you would have to dig it out.

Finishing a basement presumes you have one already and will be finishing it as a living space.

You should get a permit. Otherwise you are liable for any issues relating to how you finished the basement even after you sell it.

A house 'caught fire' just down the street from me a couple of weeks ago. It had an illegally finished basement that was being rented out. No one was hurt, but the owner of the property is now in a whole lot of trouble for an illegal renovation (including plumbing, electrical, etc), property tax evasion, and an illegal appartment.

The advantage to permits is the inspections. It will be inspected to make sure it is code compliant. That means you have done it right and won't have any problems with insurance if anything bad happens.

Good point BuildingHomes, but I think the number one reason why people don't get permits is that they're afraid their ppty taxes will hit the roof!!!!
sk

[patrob]

...but I think the number one reason why people don't get permits is that they're afraid their ppty taxes will hit the roof!!!!
sk

That's probably the main reason :lol:

[Frankie3s]

In my neighborhood, I couldn't find one legal basement based on people's MPAC assessment information online.

I wonder if the city did come along, would you as a homeowner be forced to allow them into your home to verify? Now that's a good question.

[bubs]

I think at one point in BC, a municipality assessed all of the homes in certain areas/subdivisions as having finished basements. These areas did have a lot of illegal suites. The City allowed homeowners to call for an inspection to verify that the basement was not finished. I think this got around the issue of having to let them in to check. In this case, if you didn't have a finished basement, you wanted to call them in.

[eelfliw]

Personally, I hate getting permits because that's just inviting the city to increase your property taxes. Also, being the only home in the whole area with higher property taxes than all the neighbours makes the house harder to sell.

That said, not having a permit for renos may cause problems with your home insurance company. As some insurers can decline coverage for unauthorized renovations. Remember, when you finish the basement, you are increasing living space, you are increasing replacement value and you are increasing risk.

[Dustbunny]

If you are trying to establish whether you are adding value, you need to speak with a Realtor who knows your area. Where I am, one house I had in a new development (first time home owners, young families), the Realtor told me that developed basements (professionally developed) added about $10,000 to the price of the house. Next house, older area, more mature buyers, developed basement added nothing and were often considered undesirable particularly if they were recent (as those buyers are more interested in doing the development themselves to suit). So you have to know your market.

As for permits, it's all been said. Experienced buyers rarely want a place that hasn't been permitted/inspected (unless they are tearing out anyway) and insurance can be a very real issue.

[gizmo8]

I know that on street alone there was at least 10 renovated homes and I didnt see one permit stuck on the window...most of the renovations look more cosmetic than structural though...painting,division of rooms,knocking down non load bearing walls,bathrooms,etc,etc...but a lot of basement conversions.Dont kid yourself unless the neighbors complains most renovators dont get permits, there are thousand upon thousands of renovations downtown that requires permits but never got one.

[patrob]

I got a permit for my last basement and will get one for my new house as well.

So when you finished your basement in the 1st house, did your property taxes go up:?: You always hear that this will happen if you get permits, since the city knows you have extra living space :|

[mart242]

So when you finished your basement in the 1st house, did your property taxes go up:?: You always hear that this will happen if you get permits, since the city knows you have extra living space :|

They went up but I don't think that the basement had anything to do with it. (ie: it was the rip-off 4-5% increase we got in Ottawa)

[patrob]

They went up but I don't think that the basement had anything to do with it. (ie: it was the rip-off 4-5% increase we got in Ottawa)

I see...what's new with increasing property taxes:rolleyes: ...same thing happens here in Brampton too >:( I am still waiting for my real assessment, since I only pay land taxe for now:lol:

I guess i can always call the city & ask if your property taxes will increase if your basement is finished :|

[mlc2000]

I cannot understand why you would pay more taxes,
its not like a finished basement is going to require more resources.
Except electricity and I'm paying for that..

[Dustbunny]

It depends on how the city determines taxes. I don't know about where OP lives, but where I live the taxes are based on 'market value' of the house/property (which can be a totally bogus system but that is another topic). So if you do something to your home which in the realestate world could increase it's value, they increase the taxes accordingly. It has nothing to do with how city services are used (which annoys people here to no end as there have been complaints that old neighbourhoods and brand new ones require more utility type work than the ones in between but if those in between house are valued higher, they pay higher taxes). As well, what the city values various improvements at is often not always realistic in the real selling world but again, that can vary by city as some do a better job at valuing than others.