house issue with number of rooms

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nannid
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house issue with number of rooms

Post by nannid » Fri May 19, 2017 2:52 pm

Hello all,
I bought a new house last year . I think I messed up somewhere :( , but I just realized today that the county tax assessment records show a total of 2 full baths and indicate an unfinished basement - however , this has a mostly finished basement with a full bath.
There have been 2 or 3 sets of owners over the years - it is almost 30 years old , so not sure when the basement was finished.

I did have an independent home inspection done prior to buying and no code violations or anything was reported then.

Does this mean I now need to contact my city office and try and get this fixed now? I am not sure if that is the right process.

Goal33
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Re: house issue with number of rooms

Post by Goal33 » Fri May 19, 2017 2:53 pm

I'd do nothing :)
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rcjchicity
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Re: house issue with number of rooms

Post by rcjchicity » Fri May 19, 2017 2:57 pm

Unless you feel you need to pay more in property taxes, you might let sleeping dogs lie.

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jabberwockOG
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Re: house issue with number of rooms

Post by jabberwockOG » Fri May 19, 2017 3:00 pm

Not sure what you want "fixed". Unless there is some critical and immediate benefit derived by you by contacting and engaging with a local government entity, I would not do anything at this point.

vveat
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Re: house issue with number of rooms

Post by vveat » Fri May 19, 2017 3:07 pm

When we bought our house we realized somebody (not even the previous owner) had built an addition without declaring it. We did the right thing and notified the town. Our taxes went up significantly and it took us an appeal to bring them down in line with comparables.

Ours was a big and noticeable difference, and we would do the same again (just appeal immediately :oops: ). In your case I would probably skip the notification.

nannid
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Re: house issue with number of rooms

Post by nannid » Fri May 19, 2017 3:13 pm

Great, thank you all.

I have no desire to raise my already high taxes. I guess I will let this be ..

Mudpuppy
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Re: house issue with number of rooms

Post by Mudpuppy » Fri May 19, 2017 8:28 pm

Home inspections prior to purchase do not always check for proper permitting (they're more focused on whether things are done correctly from a construction perspective). So you could find out that a prior owner converted the basement without proper permits, or there were permits pulled but they just were not recorded properly by the tax assessor. You could also face a reassessment of prior year taxes (as far back as they're allowed to go) for the modified house details. And even if you don't alert the tax assessor, these issues could potentially catch up with you in the future if they do an audit and find out there were permits, but they just weren't recorded properly.

Next time you're house hunting, investigate the property tax records as part of your search to try to detect these issues before going under contract. On my house search, there were several obviously improperly permitted additions (poorly constructed). But there were some well-done, just not properly permitted, additions that didn't show up in the tax assessor's property details.

ccieemeritus
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Re: house issue with number of rooms

Post by ccieemeritus » Fri May 19, 2017 10:01 pm

The property tax assessment is initially based on the price you paid to buy the house, which is the fair market value of the house (by definition). Since the changes were made before you bought it, there is no adjustment they need to make. So no need to report anything to be "honest".

The property tax assessment will go up each year based on the house price inflation in your area. In many states this adjustment is limited by a ballot measure.

If you make an addition, then there might be something to tell them, but they will pick that up during the permit processs.

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Watty
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Re: house issue with number of rooms

Post by Watty » Fri May 19, 2017 10:24 pm

I am not a pro in this area but I would also be concerned that this could cause insurance issues if there is something like a fire and the house burns down. It would be good to research if;

1) The insurance payment for the replacement or repairs would only apply to the work that had permits.

2) If there is something like an electrical fire and it comes up that you knew there was unpermitted and uninspected work, then the insurance company might baulk at paying a claim.

In addition when you sell the house you would need to figure out what to do about the lack of permits and inspections.

Mudpuppy
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Re: house issue with number of rooms

Post by Mudpuppy » Fri May 19, 2017 11:11 pm

darrellr wrote:The property tax assessment is initially based on the price you paid to buy the house, which is the fair market value of the house (by definition). Since the changes were made before you bought it, there is no adjustment they need to make. So no need to report anything to be "honest".

The property tax assessment will go up each year based on the house price inflation in your area. In many states this adjustment is limited by a ballot measure.

That is one way property tax can be assessed, but it's not the only way (nor is it a common method IMHO). Many areas base the property tax assessment on the property characteristics relative to the current market, not just a percentage adjustment each year based on the market appreciation/depreciation rate. So having an inaccurate record of property characteristics will result in an inaccurate assessment of property value for areas that use this method (e.g. it's assessed as 2 bath - unfinished basement property instead of a 3 bath - finished basement property). Once the unrecorded property characteristics are recorded, it will be assessed at a higher value and therefore have a higher property tax.

Note that California uses a blended methodology set by CA Proposition 13. Your sales price sets your "base rate", which appreciates by 2% each year. The assessor's office then conducts an annual characteristic-based property assessment (or at least they're supposed to, but based on a decade of behavior, my county actually only does this every other year). The lesser of your base rate or annual assessment is used for that year's tax bill.

ResearchMed
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Re: house issue with number of rooms

Post by ResearchMed » Sat May 20, 2017 9:14 am

In two separate regions of the country, we've had a house with a full "walk-out basement".
Proper sized windows, etc., not "tiny basement windows high up on the wall.
Both backed into a hill (one a gentle slope, one a steeper hill).
One is almost 100 years old, one we designed and built.

In both cases, we are not able to get the fully finished (and furnished) "lower level" to be included.
Apparently it's considered a "basement", "below grade", in both cases.
With the older house (our current home), we had the same question as OP.
We checked with town, and also with insurer. The town simply won't include the "living space" or room count.
As long as there is proper egress (there is, in both cases) that space and any improvements just don't "count" in the official "count".

So legal sale docs can't reflect the extra rooms or square footage, but all of that definitely increases the value of the house.

Homes like this have, in the selling descriptions, a comment describing the extra space, sometimes as an "inlaw apartment" or as a "guest suite".
(Whether a full kitchen, complete with oven, is "allowed", depends upon whether the zoning is single family only vs. two-family homes allowed.)

To OP: Is it possible that you have a similar situation?
Once we realized that there was no "issue", we just dropped it.

RM
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nannid
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Re: house issue with number of rooms

Post by nannid » Sat May 20, 2017 10:25 am

In both cases, we are not able to get the fully finished (and furnished) "lower level" to be included.
Apparently it's considered a "basement", "below grade", in both cases.
With the older house (our current home), we had the same question as OP.
We checked with town, and also with insurer. The town simply won't include the "living space" or room count.
As long as there is proper egress (there is, in both cases) that space and any improvements just don't "count" in the official "count".

So legal sale docs can't reflect the extra rooms or square footage, but all of that definitely increases the value of the house.

Homes like this have, in the selling descriptions, a comment describing the extra space, sometimes as an "inlaw apartment" or as a "guest suite".
(Whether a full kitchen, complete with oven, is "allowed", depends upon whether the zoning is single family only vs. two-family homes allowed.)

To OP: Is it possible that you have a similar situation?
Once we realized that there was no "issue", we just dropped it.



Yes - my basement does not have any egress window. I wonder if that is it . I know it is not considered "livable" space around here.
While looking around last year, I had looked at a similar house with an egress window and that does have the basement bathroom included. ( just checked county records )

As an aside, I never really thought about checking permits while buying the house and my realtor did not mention anything either. I thought if anything had a code violation during inspection, that would be more serious.

But honestly, do people really check for all permits on older houses? I can understand if it is a big change like some addition etc that is different from the typical house plan in that neighbourhood .
But for smaller changes , I don't know how to even go about researching all the changes to a house like additional outlets, gas lines etc that were done during 30 years and then check if they need permits and have permits !
I am just curious now if I should have done something about this while buying.


They already revised my taxes this year based on the sale price and it is quite a big bump thanks to the post-2009 recession appreciation.

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unclescrooge
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Re: house issue with number of rooms

Post by unclescrooge » Sat May 20, 2017 10:45 am

Mudpuppy wrote:
Note that California uses a blended methodology set by CA Proposition 13. Your sales price sets your "base rate", which appreciates by 2% each year. The assessor's office then conducts an annual characteristic-based property assessment (or at least they're supposed to, but based on a decade of behavior, my county actually only does this every other year). The lesser of your base rate or annual assessment is used for that year's tax bill.


I just bought a house in CA that I thought was 3,450 sqft based on assessor records. However, it turns out it's 3,100 max.

The house was in severe disrepair and I bought it under-market regardless of size.

I'm currently renovating it and adding a half bath, which might increase the assessed value.

Would I have a case for lowering any such assessment based on the decrease in sq ft?

Rupert
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Re: house issue with number of rooms

Post by Rupert » Sat May 20, 2017 11:19 am

unclescrooge wrote:
Mudpuppy wrote:
Note that California uses a blended methodology set by CA Proposition 13. Your sales price sets your "base rate", which appreciates by 2% each year. The assessor's office then conducts an annual characteristic-based property assessment (or at least they're supposed to, but based on a decade of behavior, my county actually only does this every other year). The lesser of your base rate or annual assessment is used for that year's tax bill.


I just bought a house in CA that I thought was 3,450 sqft based on assessor records. However, it turns out it's 3,100 max.

The house was in severe disrepair and I bought it under-market regardless of size.

I'm currently renovating it and adding a half bath, which might increase the assessed value.

Would I have a case for lowering any such assessment based on the decrease in sq ft?


I have successfully appealed a tax assessment when the assessment was based on incorrect square footage. I submitted a recent appraisal (which had been done in connection with a refi) with the appeal and won. It was easy.

Mudpuppy
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Re: house issue with number of rooms

Post by Mudpuppy » Sat May 20, 2017 1:01 pm

nannid wrote:As an aside, I never really thought about checking permits while buying the house and my realtor did not mention anything either. I thought if anything had a code violation during inspection, that would be more serious.

But honestly, do people really check for all permits on older houses? I can understand if it is a big change like some addition etc that is different from the typical house plan in that neighbourhood .
But for smaller changes , I don't know how to even go about researching all the changes to a house like additional outlets, gas lines etc that were done during 30 years and then check if they need permits and have permits !
I am just curious now if I should have done something about this while buying.

IMHO, it's not worth looking for permits on small things like outlets or gas lines. But it is worth looking for permits on big things like finishing a basement or additions to the house. Big things can cost big bucks if not properly permitted and the assessor figures that out. Non-permitted additions can also make selling the home in the future more difficult.

Mudpuppy
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Re: house issue with number of rooms

Post by Mudpuppy » Sat May 20, 2017 1:05 pm

unclescrooge wrote:
Mudpuppy wrote:
Note that California uses a blended methodology set by CA Proposition 13. Your sales price sets your "base rate", which appreciates by 2% each year. The assessor's office then conducts an annual characteristic-based property assessment (or at least they're supposed to, but based on a decade of behavior, my county actually only does this every other year). The lesser of your base rate or annual assessment is used for that year's tax bill.


I just bought a house in CA that I thought was 3,450 sqft based on assessor records. However, it turns out it's 3,100 max.

The house was in severe disrepair and I bought it under-market regardless of size.

I'm currently renovating it and adding a half bath, which might increase the assessed value.

Would I have a case for lowering any such assessment based on the decrease in sq ft?

You should check the assessors website to see if the procedure to appeal the property characteristics (along with the value) are listed there. This very well could have been a data entry error (meant to type 3150, typed 3450 instead since the 4 key is above the 1 key on a 10-key pad). As Rupert said, you will likely need a formal appraisal of the square footage for such an appeal. Did you get a copy of the appraisal used during the purchase?

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unclescrooge
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Re: house issue with number of rooms

Post by unclescrooge » Sat May 20, 2017 4:22 pm

Rupert wrote:
unclescrooge wrote:
Mudpuppy wrote:
Note that California uses a blended methodology set by CA Proposition 13. Your sales price sets your "base rate", which appreciates by 2% each year. The assessor's office then conducts an annual characteristic-based property assessment (or at least they're supposed to, but based on a decade of behavior, my county actually only does this every other year). The lesser of your base rate or annual assessment is used for that year's tax bill.


I just bought a house in CA that I thought was 3,450 sqft based on assessor records. However, it turns out it's 3,100 max.

The house was in severe disrepair and I bought it under-market regardless of size.

I'm currently renovating it and adding a half bath, which might increase the assessed value.

Would I have a case for lowering any such assessment based on the decrease in sq ft?


I have successfully appealed a tax assessment when the assessment was based on incorrect square footage. I submitted a recent appraisal (which had been done in connection with a refi) with the appeal and won. It was easy.


I'm worried the appraisal might be even higher than the assessment!

Mudpuppy
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Re: house issue with number of rooms

Post by Mudpuppy » Sat May 20, 2017 4:48 pm

unclescrooge wrote:I'm worried the appraisal might be even higher than the assessment!

You can pay $400-500 for an appraisal first, then decide whether to appeal. Or see if the appraisal report that was part of your purchase is still available.

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unclescrooge
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Re: house issue with number of rooms

Post by unclescrooge » Sun May 21, 2017 11:08 am

Mudpuppy wrote:
unclescrooge wrote:I'm worried the appraisal might be even higher than the assessment!

You can pay $400-500 for an appraisal first, then decide whether to appeal. Or see if the appraisal report that was part of your purchase is still available.


It's not. I had to get a hard money loan with 40% down and it didn't require an appraisal.

But I'm refinancing soon, so I'll have to get over then.

Thanks for your suggestions!

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