Adding a sunroom means adding square footage and adding square footage means increasing your home’s footprint which affects both property taxes as well as insurance premiums. But just how much are taxes and insurance rates affected by a sunroom addition?
“So – Does a sunroom addition raise my property tax?” Long story short – yes, adding any square footage onto your home will increase property taxes, but it will also increase resale value. It’s estimated that the addition of a sunroom recoups 51% of its cost at the time the home’s sale, this according to a 2010 US News and World Report article. Other reports claim even higher ROI on sunroom additions. So before we start talking about costs, it’s important to cover investments first.
Now – onto the cost of property taxes with a sunroom. How does Uncle Sam know you’ve expanded your home? When any project begins, permits are required to be pulled from the governing county before the first hammer swings. When the permits are pulled, a notification is sent to the tax assessor. At the completion of the project, the county may send a tax assessor out to determine the additional value of the home. “However, many new construction projects are not immediately assessed, and you will not pay additional property taxes due to an increase in your sunroom’s value until the county assessor estimates an increase in value and records it.”
According to The Nest, the value of the additional sunroom’s effect on property taxes for your home will be determined by the perceived assessment of the addition. This increase in value will be factored into the overall assessed value of your home and based off of that number, you will get a new property tax bill.
“Each county will have a particular rate at which it taxes residential properties. The tax rate incorporates a percentage of the value of the property’s assessment. For example, if the assessment rate is 30 percent and the house is worth $100,000, the assessment is $30,000, and the county would apply property taxes to this figure. If the sunroom adds $20,000 to the value of the property, 30 percent of the new value would be $36,000, so you would be taxed on an additional $6,000 in this example.”
It’s important to note that there are other ways a sunroom will “pay for itself,” however. “The National Association of Realtors indicates that the addition of a sunroom in neighborhoods that do not typically have sunrooms can set a property apart when it’s on the market.” So when going to sell your home, not only will you recoup some of the costs to construct the sunroom, but the amount of time your home will be on the market can be drastically shortened especially if your home is located in a neighborhood where there are no sunrooms.
How do Sunroom Additions Affect Homeowners Insurance Premiums?
Rule of thumb – more house = more to cover. If you add onto your home’s square footage, you’ll need to increase your policy coverage. Your current policy covers your home as it was the day the policy was written. If you’re going to change the home, the insurance company has to be notified to update the policy. It’s recommended to update the policy prior to getting started on construction just in case anything should happen.
Your insurance company should also be made aware of materials used in your remodel. Higher end materials mean an increase in premiums but it also means quality replacement materials should you make a claim.
But don’t be scared – additions means new construction and new construction also means better building materials and less causes for claims. New roofing can mean a 10% reduction in premiums because a new roof leaves less liability for leaks. New electrical wiring and plumbing is safer and can also be a premium reducer. Monitoring equipment that notifies homeowners of break-ins and water leaks can also mean saving insurance dollars up to 20% in some cases!