Building a beautiful back deck has many benefits—a deck is a comfortable space outside to relax, have social gatherings and spend quality time with the family.
We can all agree that sounds great. But a concern we hear from homeowners from time to time is if building a deck will affect their taxes.
It’s easy to let fear control our decisions, but we’re here to help you better understand the situation. So, does adding a deck increase property taxes?
Let’s find out.
Taxes & Property Value
In the United States, property taxes are generally calculated based on your home and property value. An appraiser considers your home’s size, condition, age, location, etc. Any improvements you make will increase the total value, and naturally, your taxes will follow suit.
If you want to dive into more about taxes, Investopedia has a great post on How Property Taxes Are Calculated.
Tax Increases
By how much can property taxes rise from a home improvement project?
Let’s share a specific example with a specific outcome: We built a large 700 square foot deck in Canton Township, Michigan, in 2020. We gave the homeowners a call the following year and asked about any tax increases, and they let us know that their taxes went up by about $100 total per year.
Considering Canton is known for higher taxes around the area, it’s not an exceedingly high amount. And certainly not aligned with some of the fears we’ve heard about taxes increasing hundreds or even thousands of dollars. And if you’re lucky, some municipalities may not raise your tax rate at all.
We did the same exercise with a client from Ypsilanti Township, Michigan, for a deck we built in 2020. We called the homeowner in 2021 and the homeowner did not see their taxes rise at all from the deck build. This was a 400 square foot Trex composite deck, with no increase in taxes.
So the answer is, it depends. But a couple of different factors will determine how much of an increase you’re likely to see.
Where You Live
The amount your taxes go up will largely depend on where you live. In many states, there are laws that limit how much your property taxes can increase in a year.
For example, Michigan passed Proposal A in 1994, which states that property taxes cannot increase more than the annual inflation rate or 5%, whichever is less. And in California there’s Proposition 13, which California passed in 1978. It states that property assessments cannot rise more than 2% annually, and therefore limits how much your property taxes can increase.
However, it’s not uncommon for the value of home improvements (including decks, patios, kitchens, finished basements, etc.) to be excluded from these yearly limits. It really comes down to where you live. But the taxable value will never be higher than the assessed value of your home.
PRO TIP: Make a Quick Call
Our best advice would be to try calling your local assessors department if you’re concerned about how much your taxes may rise. They should be able to give you a rough idea of what to expect before you start the build.
The Size & Features of Your Deck
Beyond location, it’s worth noting that the actual deck itself will also impact how much value it adds to your property. Factors to keep in mind are:
- The square footage (bigger generally equals more value)
- Building materials (wood vs. composite)
- Features (multi-levels, hot tub, built-in seating, etc.)
Assessments After the Build
In some municipalities, the city or township will likely send someone to examine your new, completed deck. They need to determine how much value it adds to your home so they can adjust your property taxes. Usually, this happens within 1-6 months of completing the project.
Note: Sometimes the appraiser will come unannounced, but they should always knock on your front door first before entering your backyard. Unfortunately, this is a factor outside of any builder’s control. But if you give the assessor’s office a call, they should be able to let you know if and when the visit is likely to happen.
After the assessment, your home’s taxable value may be updated, and you may see an increase that reflects your higher property value. You should get a copy of the reassessment with all of the details and notes from the appraiser. If you disagree with the appraisal given and want to dispute the assessment, most assessors offices have an appeal process you can follow.
The Temptation to Avoid Permits
It can be tempting to skip out on the permit process when starting a new project. The thought is that if you don’t obtain the permit, then the city won’t know about the build, and your property taxes won’t increase.
We don’t advise this, and explain all the reasons you need a permit in our post “Why You Need a Permit When Building a Deck.” But primarily, it’s to ensure your deck is built correctly and is safe. And the reality is building without a permit will be a more expensive route to take in the long run.
We hear of more and more municipalities flying drones over neighborhoods. Drones have exceptional cameras, and it gives the city the ability to see any new projects which they can cross-check for permits. Including:
- Decks
- Patios (in some municipalities)
- Roofs
- Shops
- House additions
The more common culprit of your municipality finding out about an unpermitted project is a nosy neighbor.
If you don’t have a permit for your deck, you may be forced to disassemble part or all of it and fined for building without one. Then the project must be approved by the local zoning department to rebuild and followed by inspections. Also, if you’re part of a condo or homeowners association, you’ll need their approval before getting started. If you’re working with a professional deck builder, they should be the ones to secure any necessary approvals and permits.
The Bottom Line
Does adding a deck increase property taxes? In some cases, yes, but there’s usually no need to panic. While we have no way of telling you exactly how much of an increase you’ll see, doing a bit of research where you live or making a phone call will give you a good idea. If there is an increase, it’s likely less than about $100 per year, but this depends on the size of the project and your municipality.
Ready to Build?
At Custom Deck Creations, we build composite decks for clients across Southeast Michigan. We’ll work with you to design a space that fits your vision and budget. Feel free to check out some of our most recent builds for a little inspiration, and when you’re ready, get in touch for a free, over-the-phone estimate.
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