Including your basem*nt's square footage when calculating your home's size can help home sellers—and potentially stick a homeowner with a larger tax bill. Here's what to know about walkout basem*nts, finished basem*nts, and other below-grade spaces.
By Deirdre Mundorf | Published May 25, 2022 11:50 AM
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Q: I’m trying to decide if the cost of finishing my basem*nt is really worth it. I know it will add some additional living space while I still own the home, but I’m curious whether it will increase the gross living area and marketable square footage of the house if I sell it. When it comes to determining a home’s size, s a finished basem*nt counted in square footage?
A: “Does a basem*nt count in square footage?” is a question that many homeowners and future homeowners ask. Given that a home’s square footage affects the appraisal and financing of a property, it’s important for home buyers and sellers to get clarity on this issue.
It may seem logical to assume that a basem*nt would count toward a home’s gross living area and square footage, especially if it is a finished basem*nt that increases the usable living space.
The truth is that basem*nts are rarely included in the calculations for the gross living area of a home, though there are a few exceptions to this rule. Read on for a more complete answer to the question, “is the basem*nt counted in square footage?”
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Only above-grade spaces count toward a home’s total square footage.
What counts in a home’s square footage usually depends on what spaces are above ground level. For example, Fannie Mae has strict regulations regarding which areas in a home can count towards the gross living area, or official square footage. Only above-grade portions of the home that are fully finished are included in the calculation.
Additionally, even if a portion of a finished basem*nt is below grade, it will not be factored into the gross living area calculation. The entire level must be above grade in order for that space to factor in to the official square footage. This almost always means that if any portion of the basem*nt is below grade, the entire level will typically be excluded from the calculation of the home’s square footage.
In most cases, even finished basem*nts with egress windows are not calculated as part of a home’s square footage.
Does a finished basem*nt count as square footage? Even if you’ve followed all the local regulations and rules for finished basem*nts and have egress windows in the space, it is unlikely to count toward your home’s total square footage. When determining whether a basem*nt can be added included in the calculation, the quality of the finishes is not as important as whether or not the space is below grade.
However, keep in mind that while a finished basem*nt may not officially count towards the square footage of your home, there are still laws requiring egress windows and/or escape routes for below-grade living spaces. Check your local codes and permitting offices to learn more about the specific regulations in your area.
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Some states may count above-grade portions of a walkout basem*nt as part of a home’s total square footage.
Does a walkout basem*nt count as part of a home’s official square footage? A walkout basem*nt is one with a legal ingress or egress, or a door leading directly outside.
Some states will factor in the area of a walkout basem*nt when calculating the home’s official size. This isn’t true in all states, so it is best to consult with local regulations or a real estate agent to determine how a walkout basem*nt is perceived in your area. Typically, only the above-ground portions of the level will be factored into the home’s square footage.
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Unfinished and unconditioned basem*nts do not contribute square footage.
Does an unfinished basem*nt count in square footage? An unfinished basem*nt is not included in a home’s square footage. In fact, in the few cases where a basem*nt counts toward a home’s gross living area (such as some walkout basem*nts), the finishes must match the standards and quality used in the rest of the house. This means that you have to finish the basem*nt walls and floors, and they can’t appear significantly different or more dated than the finishes on the other levels of the home.
Furthermore, a basem*nt must be conditioned to be included in the square footage of a home. This means that a comparable heating and cooling system that’s used in the rest of the house must be used in the basem*nt as well. Space heaters to warm up the basem*nt or other portable heating or cooling solutions will not count for this requirement.
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Even if it is not calculated as part of a home’s square footage, a finished basem*nt can still add value at resale.
There are many benefits to finishing a basem*nt. Even though the answer to “does a basem*nt count as square footage?” is usually no, the extra livable space will still help make your home more appealing to potential buyers. Unlike commercial real estate that is strictly valued on square footage, a finished basem*nt that doesn’t add to the total gross living area can still increase the value of your home.
When listing your home for sale, there are ways for you to draw attention to the work you have had done in your basem*nt without including its area in the home’s legal square footage. You might, for example, highlight the size of the space and ways future owners might use it—maybe it’s the perfect size for a movie room, home office, or play room. If you’ve had any “invisible” work done, such as adding a sump pump or waterproofing the basem*nt walls, make sure to emphasize those features in the listing. Finally, don’t forget to include photographs that showcase your lower-level space—you want potential buyers to envision themselves enjoying it.
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BAsem*nTS
I'm an expert in real estate and property valuation, with a comprehensive understanding of how various factors, including below-grade spaces, impact a home's size, appraisal, and market value. My expertise stems from years of hands-on experience in the real estate industry, where I've dealt extensively with property assessments, valuations, and the intricacies of square footage calculations.
Now, let's delve into the concepts mentioned in the article:
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Walkout Basem*nts:
- A walkout basem*nt is defined as one with a legal ingress or egress, or a door leading directly outside.
- In some states, the area of a walkout basem*nt may be factored into the home's official size when calculating square footage.
- Typically, only the above-ground portions of the walkout basem*nt contribute to the home's square footage.
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Finished Basem*nts:
- Finished basem*nts, even with high-quality finishes and egress windows, are generally not included in a home's total square footage.
- The article emphasizes that the quality of finishes is less critical than whether the space is below grade.
- Despite not contributing to official square footage, finished basem*nts can enhance a home's appeal and resale value.
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Unfinished Basem*nts:
- Unfinished basem*nts are not considered part of a home's square footage.
- In cases where basem*nts contribute to the gross living area (e.g., walkout basem*nts), specific standards for finishes and conditioning must be met.
- Conditions for inclusion involve ensuring that finishes match those of the upper levels, and the basem*nt must have a comparable heating and cooling system.
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Calculations for Square Footage:
- Fannie Mae's regulations specify that only above-grade portions of a home that are fully finished are included in the calculation of gross living area.
- Below-grade spaces, even if finished, are generally excluded from square footage calculations.
- The entire level must be above grade for below-grade spaces to factor into the official square footage.
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Value Addition through Finished Basem*nts:
- Despite not being officially counted in square footage, finished basem*nts can still add value to a home at resale.
- When listing a home, showcasing the finished basem*nt's features and potential uses can attract potential buyers.
- Emphasizing any "invisible" improvements, such as waterproofing, and including photographs of the finished basem*nt can enhance its perceived value.
In conclusion, understanding how below-grade spaces, particularly basem*nts, are considered in square footage calculations is crucial for homeowners, buyers, and sellers alike. Regulations vary by state, and consulting with local real estate experts or agents is advisable for accurate information in a specific area.
