Bought the house for 300k, put 300k in fancy renovation,

Real Estate Agent · St Petersburg, FL · Member since 2019 · 321 posts · 182 votes

Have you run the numbers to determine what your new projected property taxes would be?

If not, most county property appraiser sites in Florida have calculators to get an estimate for the upcoming year. Can also have a quick general convo with the property appraiser office to determine how Save Our Homes/Homestead (if it applies) will cap the assessed value of the home.

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Shawn K HicksBusiness Member

Real Estate Agent · Gainesville, FL · Member since 2019 · 128 posts · 107 votes

4y

Quote from @Alberto C.:

I bought a 1959 house for 300k in 2018, 2400 sqf, in Gainesville Florida, 1 mile north of UF campus. I live in the house and I work at UF. I paid off the loan in 2021 (inheritance plus good savings from my job, and April 2022 I decided to get a HELOC do a renovation, and make the house modern and fancy (R&Q select oak throughout, modern kitchen, took down 2 walls for open space vibe, modern electric fireplace bumpout with cabinets in veneer wood, bar in veneer wood, remodeled master bathroom, Sonos music system throughout the house. Total cost: 300k. Renovation will be completed in 2-3 weeks. Now the house in Zillow is 466k, but Zillow does not know yet I am renovating of coarse since I am not done. In April (pre-renovation) in-house appraisal for the HELOC came up to 420k (and Zillow was 429k so they were consistent). I asked the appraiser how much the price will go up with those 300k renovation and he said "I am not sure without seeing it, but make sure to show up the 300k receipt to the appraiser to try influence him and bump price up". Should I really do that and show receipt to try to bump price up? Only built-in bar and built-in bump-out fireplace were 70k. On the one hand I would love the property value to go up by 50% of the cost of the renovation (150k, which would make the house value go up to 616k, which seems a lot to me). On the other hand, I dont wanna pay a shitload of property taxes. Should I maybe not show the receipts and get a lower appraisal to save in property taxes, and then in the future if I wanna sell (not before 5 years from now) I ask for a second appraisal and show receipts?

"Note, I erased my long reply as I reread your post & better understood the context the second time."

Edit: I see now you're actively undergoing a Heloc. I'd go ahead and push for as high of value as possible. I could be mistaken, but I don't know that the County will have access to or use your appraisal for whatever assessment they place on your property's value.

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Jaron WallingPro Member

Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes

4y

@Alberto C. My guy... you have much to learn, research, and understand about real estate. Lots to unpack here but one statement you made is pretty glaring. You can't just "show a receipt" for work completed and think it's going to influence an an appraisal. We're talking about a SFH. It's based on numbers, location, and comps not shiny pictures and opinions. A million dollar renovation isn't correlated to what the county thinks your property is worth. It's never the same number. The property taxes will increase no doubt but it's one factor of many affecting the outcome of this investment.

If you over renovate a property it's over renovated. Can't go back in time so make the most of it and move on. I'd guess you're planning to sell, refinance, or get a fixed rate mortgage. Didn't see anything about the strategy but something to consider. I'd focus less on expensive renovation projects and more on why you're doing it.

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Eddy OgbekhiluPro Member

Investor · Lutz Florida . · Member since 2018 · 103 posts · 34 votes

4y

Hello Calixte...would like to chat with you if you have some time.

Eddy

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Brad S.

Investor · Pasadena, CA · Member since 2017 · 613 posts · 523 votes

4y

@Alberto C.

First thing - An appraisal done for a loan will not affect the tax assessed value. The assessor will never see it first of all and it is done for financing purposes, not tax assessment purposes.

Second - the appraiser is "influenced" by market data, not by Owner bias. Give them all the info and data you think is important for them to consider in their analysis.

for the record - I am a longtime Certified RE Appraiser and ex-Deputy Tax Assessor (not in FL)

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Alberto C.

OP

Gainesville, FL · Member since 2018 · 16 posts · 0 votes

4y

Thank you. I have never said an appraisal for the loan. I already got my HELOC before I started renovation. I am talking about appraisal after the renovation is done. I am just sharing what the HELOC appraiser said, he said "show the appraiser the receipt, explain that the flooring and all built-ins are real wood or engineered wood, not vinyl." The bathroom itself was a 55k renovation (in wall floating bidet and toilet, custom made cabinets, 30" tiles everywhere except ceiling, walk in shower with thick glass, ditra everywhere), all high quality stuff. I didnt over renovated, it is my house, I wanna live in a fancy house with fancy stuff, that is it, and I might live here forever. But I wanna make sure if one day I move somewhere else (not before 5 years) the sell price will reflect as much as possible the renovations made.

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Andrew S.

Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes

4y

Quote from @Alberto C.:

Thank you. I have never said an appraisal for the loan. I already got my HELOC before I started renovation. I am talking about appraisal after the renovation is done. I am just sharing what the HELOC appraiser said, he said "show the appraiser the receipt, explain that the flooring and all built-ins are real wood or engineered wood, not vinyl." The bathroom itself was a 55k renovation (in wall floating bidet and toilet, custom made cabinets, 30" tiles everywhere except ceiling, walk in shower with thick glass, ditra everywhere), all high quality stuff. I didnt over renovated, it is my house, I wanna live in a fancy house with fancy stuff, that is it, and I might live here forever. But I wanna make sure if one day I move somewhere else (not before 5 years) the sell price will reflect as much as possible the renovations made.

Just a couple of thoughts. In my neck of the woods, appraisers generally do appreciate and accept information on recent improvements. Maybe providing actual receipts is a little bit over the top, but in my opinion not totally crazy. Give them whatever you feel might help (including suggested comps!) and then they will decide what and how to use for their appraisal.

All that said, Since you are planning on living in this property for the foreseeable future, why would you spend $500 for an appraisal? Unless you want to refinance your HELOC say into a fixed rate loan or pull equity out for other purposes, just leave it alone. Chances are it will take a while for the property tax people to catch up (although some justisdictions around here will send out annual questionnaires where you are supposed to report improvements, etc, - if that is the case in your neck of the woods then you may be stuck).

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Alberto C.

OP

Gainesville, FL · Member since 2018 · 16 posts · 0 votes

4y

Thank you. Here ( https://www.fmins.com/blog/hom... ) it says: "you recently renovated? If so, it’s a good idea to do a home reappraisal. Your home’s value often increases following renovations. And to protect your investments, having an up-to-date appraisal and insurance coverage offers added protection and peace of mind."

So I am curious to understand if it would be good or not to do an appraisal, and if this would crazily increase property taxes.

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Brad S.

Investor · Pasadena, CA · Member since 2017 · 613 posts · 523 votes

4y

Quote from @Alberto C.:

Thank you. Here ( https://www.fmins.com/blog/hom... ) it says: "you recently renovated? If so, it’s a good idea to do a home reappraisal. Your home’s value often increases following renovations. And to protect your investments, having an up-to-date appraisal and insurance coverage offers added protection and peace of mind."

So I am curious to understand if it would be good or not to do an appraisal, and if this would crazily increase property taxes.

@Alberto C. Please see my previous post above.

A private or lender appraisal should not increase your property taxes. The tax assessor does not get these reports. The tax assessor may be able to increase your taxes, due to the improvements you made, but that has nothing to do with any appraisal you would get. They may get copies of any permits issued by your city, and send someone out to update their records, but I don't know how that works in your state and county.

As far as getting your home reappraised for insurance purposes - to protect your investment:
It may be a good idea, but not necessarily needed. But understand, what you would be interested in is not the market value of your house, but the replacement cost of the improvements. 2 distinctly different things, and most fee appraisers are not well versed in detailed replacement cost. So, you probably would waste your money if you just got an appraisal from any 'ol appraiser.

You would want to find someone who is up to date on current local replacement costs. Some insurance companies use third party companies to do insurance appraisals, which includes a cost segregation breakdown of a houses' improvements and features. They especially do this on higher end properties, to verify the correct coverage. But, again, this is a specialty, that not many appraisers do. Very few appraisers I have known do this. Many years ago, I worked for a company that did insurance appraisals, so I was trained in this, but the company I worked for used to compile their own cost tables, from multiple sources and it was not publicly available.

So, bottomline, if that your coverage amount is a concern of yours, you may want to ask your insurance company about verifying that you have adequate coverage and see if they can assist you in getting a cost analysis or "insurance appraisal." I used to use a website for cost figures for my market value appraisals, but those are no longer free and probably not accurate enough for insurance purposes.
Hope this helps.

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Bought the house for 300k, put 300k in fancy renovation,

Bought the house for 300k, put 300k in fancy renovation,

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