The Help Desk

Your tough questions. MONEY's smart answers.
Presented by

Can I cut property taxes by reducing my home's usable space?

December 28, 2012: 6:30 AM ET

I own a home in Connecticut. I'm currently paying taxes on rooms that I don't use or need. For instance, I finished a bonus room over my garage and fifth bedroom in my attic with heat and sheetrock. Can I "unconvert" these unnecessary rooms to lower my property taxes? – Debra L.

Yes, you can — but it may not make sense to do so. As Newton Buckner, partner at Hartford, Conn.-based accounting firm Whittlesey & Hadley, points out, the only way to cut your property taxes is by devaluing your property. And if you plan on selling your house at some point, that may not be such a smart move.

Weigh the costs against the benefits of what you're proposing. A local real estate broker could tell you how the value of your home would change if you turned it into a four-bedroom house with an unfinished space above the garage. And your town assessor can confirm what impact that drop in value would have on your annual property taxes. But don't forget to factor in the costs of the "unconversion." Buckner notes that you'll probably need to apply for permits, along with paying for any necessary plumbing, electrical and heating work to stay in compliance with municipal building code.

In the end, you may discover that you've reduced the value of your home by $50,000 dollars, which could save you around $1,690 in taxes, given your town's property tax rate. If you were planning on staying in your house for the next 15 to 20 years, those savings might well offset the cost of labor and the loss of value to your home. But if you think you might want to sell your house before then, you're probably better off leaving the unused space as is.

— Marc Mewshaw

Got a question for the Help Desk? Send it to helpdesk@cnnmoney.com.

Posted in: Real Estate, Taxes
Join the Conversation
Help Desk

Got a question about your money? We want to hear it! Each week we're answering your questions on CNN, Headline News and CNNMoney.com.

Your email or phone number won't be published; we'll use it to get in touch if we need more information about your question.
Help Desk Video
  • NEXT
    Not enough money in America's 401(k)s
    Despite the surging stock market bringing balances to record highs, the average Fidelity 401(k) account has less than $100,000 in it. That's just not enough. Play
  • NEXT
    BACK
    Explaining Obama's myRA
    President Obama unveiled a new savings plan for retirement accounts, aimed at encouraging people to start building their nest egg. But how exactly does it work? Play
  • NEXT
    BACK
    Tricks on how to save in your 20s
    Saving for your retirement in your 20s doesn't have to be a financial burden. Prioritizing your expenses is usually the first step in building a nest egg. Play
  • BACK
    Don't get fooled by Black Friday sales
    Here are some of the tricks that retailers use to make you think you're getting a deal. Keep an eye out for them while shopping this Black Friday. Play
Best Tips
Some of the nation's leading business owners, investors, and thinkers share their thoughts on rebuilding your wealth. More
These strategies can help you manage the challenges -- both emotional and financial -- of helping an aging parent from afar. More
You don't need to be fanatical to get to 780. Those in the know say these moves matter most. More
Featured Newsletters

Tips for saving and spending smarter.

Search This Column
View all entries from this: Week, Month
Help Desk
More help for your career, your investments and your budget.
Powered by WordPress.com VIP.