October 2023

The lowdown on finishing your basement

You may be considering basement renovations for a variety of reasons. Maybe you’ve always wanted a game room with a bar. Maybe you need to add a bedroom and bathroom to your home. Maybe you’re hoping to increase your home’s resale value.

No matter what your motivation, there are some basic principles to keep in mind when considering basement renovations:

Will finishing your basement add value to your home?

The simple answer is yes. But there are things to consider. The first is that a basement is considered below-grade, and any area deemed below-grade is not worth as much as its above-grade equivalent.

Below-grade simply means below the level of dirt/soil outside your home. A room that is only a few inches below that soil level is still legally considered below-grade.

Since below-grade areas of your home are worth less than above-grade areas, if you were renovating purely to add resale value to your home, your basement would rank last in terms of return on investment. It’s best to add a finished basement to a home you plan to live in for at least the next few years.

Below-grade square footage

Below-grade square footage and rooms do not count in the legal determination of your home’s description. For example, if your home has four bedrooms above grade and one bedroom in the basement, legally, you must describe your home as a four-bedroom home. If your home has 2,000 square feet above grade and 800 square feet below grade, legally, your home is defined as a 2,000-square-foot home, not a 2,800-square-foot home.

Though not counted toward your home’s legal square footage, the renovations you do in your basement do factor into your home’s appraisal.

Codes and permits

The legal requirements for whether you need a permit to finish your basement differ from state to state. If a permit is required to finish your basement, and you renovate it without securing the proper permit(s), the work you do may actually decrease the value of your home.

Rules about the size and height of rooms may differ from place to place. In general, all basement rooms need to be a minimum of seven feet high. Consult your local government to find out the requirements in terms of height, size, HVAC, windows, doors and so on.

Egress window

One universal element that all basements are required to have is at least one emergency escape and rescue opening. Aside from doors, egress windows are the most common form of these exits. Egress windows are defined as “a window of a certain size that provides a safe exit from a building in case of an emergency.”Footnote1

Egress windows must have:

  1. Minimum 5.7 square feet of net clear opening area
  2. Minimum 24 inches of net clear height opening
  3. Minimum 20 inches of net clear width openingFootnote1

If you have a basement door that leads directly to the outside, you don’t need an egress window.

Proper insulation and moisture resistance

Basements present a particular set of challenges that their above-grade counterparts may not, and chief among them are insulation and moisture. Investing in proper insulation will save you money in the long term when heating and cooling the basement. Consider a backup sump pump to handle any flooding that may occur, and opt for moisture-resistant building materials whenever possible.

Multifunctional space

You have the freedom to turn your basement into whatever you want it to be (within reason). Of all the areas in your home, basements are often spacious and open enough to serve multiple functions. You may not have to choose between having a game room, a home theater, an exercise room and a home office—you may be able to do all four.

Basement apartments

Converting your basement into an apartment that you rent out can be a lucrative endeavor. In terms of legal requirements, a basement apartment requires several things that a regular finished basement does not, including a door to the outside and a window in every room. This is another time to consult with your local government to find out the legal requirements for basement apartment building codes and permits in your area.

In addition to increasing your home’s resale value, finished basements can make your home more appealing to potential buyers. Prospective homeowners walk through a space and imagine the life they can lead inside those walls, so turning a dark, dank space into something cozy and engaging could go a long way toward convincing someone to bid on your property.

A note from your lending specialist

Ready to renovate your basement? Let’s discuss using a home equity line of credit to finance it.

1Egress Window Requirements: Understanding Size and Locations.” Copyright © 2023

Building Code Trainer. Accessed July 2023.

MAP5910691 | 09/2023

More from this month's issue