What Is Considered A Finished Basem*nt? (2024)

There is some confusion about what is considered a finished basem*nt versus an unfinished basem*nt when it comes to basem*nts. In most municipalities, building code is slightly different for unfinished compared to finished basem*nts, so it is important to know the difference.

A finished basem*nt is considered finished when the entirety is floored, insulated, and covered with drywall or paneling on the walls and ceilings. All utilities should be connected to those used on the floor above. A means of interior egress and windows for bedrooms are also necessary.

There are exceptions to the above rule, but in general, having a finished basem*nt means following a set of building codes that are more strict for the basem*nt than the floor above it. In this article, we’ll take a closer look at what is and is not considered a finished basem*nt.

What is an Unfinished Basem*nt?

An unfinished basem*nt is a below or partially below-grade basem*nt that does not have finished walls, ceilings, or floors. It also does not have utilities such as plumbing, electrical, or HVAC. A basem*nt with some, but not all, of these finishing details is still considered unfinished.

An unfinished area may have rooms that are completely finished, such as a bedroom or living room. However, according to realtors and your municipality or county, it is still deemed an unfinished basem*nt as a whole.

What Is Considered a Finished Basem*nt?

A finished basem*nt has finished floors, ceilings, and walls. All electrical, plumbing and HVAC is hooked up according to code, just as your floor above. There must be proper egress – interior stairs and windows in bedrooms. All rooms – with some exceptions for the utility room – must be finished in this manner to have a fully finished basem*nt.

Below we’ll go through each part of a basem*nt to explain what is required for a finished basem*nt.

Floor and Ceiling

For a finished living space, all floors need a floor covering. Whether it is tile, laminate, or even carpet, a finished basem*nt requires a covered floor. The exception is the utility room – you can still have a finished basem*nt even if your utility room has a concrete floor.

The ceiling must also be covered with drywall or a drop ceiling in all parts of the basem*nt. For a finished basem*nt, insulation is not required in the ceiling.

Even the utility room must have a covering. However, the utility room ceiling only needs a firebreak. That can be fire-rated drywall, insulation, or as simple as filling any openings to the floor above with fire-rated foam. Check with your local building department before you start, however, to see what they require.

Walls

Basem*nt walls should be framed and insulated with a vapor barrier, plus drywall or whatever finished wall covering you choose. Inspectors will need to see the walls before putting on the drywall to ensure proper insulation and utility work is completed to code.

The utility room must also be insulated and have a wall covering. Many people opt for drywall but then choose not to paint or finish it – similar to a garage.

Finishing basem*nt walls and floors are one of the hidden benefits of finishing a basem*nt space. When you put insulation over bare concrete walls and cover the concrete floor, the energy savings can be quite large.

Stairs

Finished basem*nts require interior stairs to the floor above. A trap door with a ladder or any other type of interior egress is not acceptable – you must have stairs built to code with proper clearances. The bottom stair nosing must be at least 6’ 8” from the ceiling above it, with proper rise and run distances per stair.

Exterior stairs are not required. If you have a basem*nt apartment, then exterior stairs may be required depending on your municipality. If you don’t have a basem*nt apartment, then interior stairs and windows in bedrooms large enough for egress in an emergency are adequate.

Utilities

Your finished basem*nt must have the same utilities as the floor above. That means the basem*nt must have the same power source and share plumbing with the floor above.

For basem*nt heating and cooling, your ductwork in your basem*nt must link to the house ductwork. You cannot have forced air on the floor above and only baseboard heaters in your basem*nt. If you insist on basem*nt baseboard heaters, you still need registers, too.

Some people do not like covering their basem*nt ceilings because all their wiring and plumbing get covered, too. A drop ceiling is a great alternative to drywalling, as it will continue to let you have access to space above without having to remove drywall.

Lightning

Lighting a basem*nt must be according to the building code. Some municipalities will have specific guidelines for lights in a basem*nt, while others will simply allow you to follow a general plan for lighting an interior residential space.

You’ll need light switches at the bottom and tops of the stairs, as well as a switch at the entrance of the utility room. Any other room needs a switch at the entrance, which is no different than light switches you would have on any other floor.

Rooms

When the basem*nt is finished, it is not required to have a specific number of rooms or bathrooms. A finished basem*nt could have multiple bedrooms and bathrooms or just one room plus a utility room.

If you do opt for a bedroom, it must have a window that a person can fit through in an emergency. That means they must be at least 20” wide, 24” tall, and no more than 44” off the ground. If your windows do not meet that standard, then you cannot, according to the IRC, have a bedroom in your basem*nt. You can still have a finished space, however.

Is a Finished Basem*nt Included in Square Footage?

No, realtors do not – or should not – count a home’s square footage towards the overall square footage of a house. The overall square footage will only include the spaces above grade, except the attic when you get a property tax statement.

If the house has a walkout or is only partially below grade, then the entire level is still considered below grade and will still not be counted toward the overall square footage. A separate note may be included in a real estate listing mentioning “finished basem*nt square footage”.

Just because a finished basem*nt isn’t included doesn’t mean you don’t have added value to your home. If you’ve taken out permits to finish a basem*nt, the assessed value of your home will increase and so will your property taxes. Also, a home with 1,200 square feet and a finished basem*nt will always sell for more than the same home without a finished basem*nt.

Finally, remember that overall square footage and a home’s valuation are two different things. Realtors and tax assessors need square footage to be a uniform, objective calculation. It is driven by the need to assess all properties on an equal basis.

A home’s valuation depends on many more subjective forces, such as the local house market and the whims of buyers and sellers.

Thus, you should not get too upset if your property tax assessment still shows your house at 1,000 square feet even though the basem*nt is finished. You’ll still reap the benefits of the basem*nt reno when it comes time to sell.

Does Finished Basem*nt Increase Property Tax?

While it depends on the municipality, a finished living space will increase the value of your house. Once your county or municipality increases the value of your home, then your property taxes increase. Anytime you take out permits to finish a space, it will affect the valuation of your home – usually for the greater.

When the basem*nt is finished, it is considered a living space to real estate agents and is taxed as a living space, provided you’ve taken out the appropriate permits to finish the basem*nt. If the area is taxed, then it must be considered a living area, even if it doesn’t count toward your overall square footage.

Does a Finished Basem*nt Add Value?

A finished basem*nt adds just under 70% of the value spent on a finished basem*nt. If you’ve spent $40,000 to finish your basem*nt, you can expect an increase in home value of $25,000 when it comes time to sell the house, according to real estate agents and other experts.

A finished basem*nt adds tremendous value to the home, but it can vary depending on what you’ve put in the finished basem*nt. If there is a bathroom and a bedroom, the value will be much greater than simply a finished living area with no other rooms.

What Is a Partially Finished Basem*nt (Semi-Finished)?

A partially finished basem*nt has finished and unfinished areas. For instance, many people will have a fully finished living area and maybe a bedroom or half bathroom in their basem*nt. These areas will have fully finished walls, floors, and ceilings with all utilities done correctly. They’ll also have appropriate lighting and egress.

The unfinished area may be closer to the utility room, with a workshop that has concrete floors and walls without any finishing.

The unfinished areas do not count towards the value of your house or the square footage. However, ask any real estate agent and they’ll tell you that the finished area will increase the value of your home, both in re-sale and for tax purposes. This is considered a partially finished basem*nt.

Finished vs. Unfinished Basem*nt: Which Is Better?

A fully finished living space is desirable for most homeowners. Why? It increases the value of your home and the liveable space of your home. Yes, it requires a financial commitment to finish a basem*nt, but it is worth the cost for most people. Don’t forget the efficiency savings that come with insulating and finishing your basem*nt space, too.

The overall benefits of finishing a basem*nt include:

• Increased living space
• Higher home valuation
• Additional bedrooms and or/bathrooms
• Improved energy efficiency
• Option for basem*nt apartment

An unfinished basem*nt works for those who simply don’t need the space or do not have the funds to finish the basem*nt. If you plan to stay in your home, an increase in your property value may not be in your best interest.

Also, if you’ve moved into a new home with an unfinished basem*nt, it may be wise to wait to finish that space for a few years. That will give you a chance to assess any moisture or leaks before they wreck your finishing work. Then you can fix the issues and finish off your basem*nt with the knowledge that there won’t be any hidden surprises.

The benefits of not finishing your basem*nt are:

• Lower property tax
• Savings from not paying to finish the basem*nt
• Easier to spot leaks and moisture
• Good storage area as you can’t damage an unfinished space

Overall, it makes more sense to finish the basem*nt. If you are a DIY person like myself, then you can save money acquiring the permits and finishing the space on your own time. Increasing your property value, in the end, is always the best decision.