In 1993, I acted as "owner/general contractor" in a fairly significant remodel. We tore off the entire roof, and with the exception of three, every wall down to the subfloor; gutted all the old electrical, HVAC, galvanized plumbing, drain/waste piping etc. We then added 1700sf and doubled the home's size.
Hear me on this topic: your cost can only be accurately determined based on the level of detail provided to the contractor bidding on your job!
Commit this inverse relationship to memory: Increased detail = reduced Change Order$ (not a good idea to travel down the reverse path).
If you are going to remodel definitely use an architect! I'm extremely pleased we didn't build what I had â€œcost-consciouslyâ€ created on my home computer at the time. Also, start collecting your remodeling ideas (with pictures) so you can communicate exactly what you want to the Architect. Both you and the Architect will be pleased you did! A fantastic tool you can use to gather your â€œdesign thoughtsâ€ is http://www.houzz.com
â€“ I certainly wish I had it back in 93! Figure on at least a year to â€œperfectâ€ your remodel on paper and the corresponding budget (the legwork takes time).
Use LICENSED contractors when a task crosses over your â€œDo-it-yourselfâ€ comfort level of difficulty. https://www2.cslb.ca.gov/OnlineServices/CheckLicenseII/check
Make sure to obtain a permit for the work. If you do not take this step an Appraiser will not be able to provide any value for the remodel, which could "blow-up" any future sale because this can affect the Buyer's financing in addition to making the Buyer wonder if the remodel was done per building code.
From your profile I assume you live in SJ. Hereâ€™s the main permitting site for San Jose for your reference: http://www.sanjoseca.gov/building/permit.asp
Visit the SJ permit office to find out what you will need to provide them based on the scope of your project. Most of these offices are quite helpful in this regard. Ask about your "Property Line Set Backs". Just about every detached residential home has "setbacks" that bound the front, back, and side foundation foot prints of any remodel to a limited space (sometimes you can actually extend this about three feet if you cantilever a bay window). There may also be â€œFloor Area Lot Ratiosâ€ that effectively govern this as well. Bottom line: donâ€™t let this scare you away from your project, just confirm details via the city permit department.
Moving forward to the completion of your remodel:
When a City or other governmental jurisdiction issues a building permit, they are required to notify the Assessor's office of that new permit. Santa Clara County, and all 15 cities within the county, are required to provide the County Assessor with copies of building permits. This notification is required since the Assessor is mandated to assess value added by new construction. Typically, this will manifest itself in you receiving a â€œBuilding Questionnaire/Statement Formâ€ to fill out and return to the Assessors' Office which asks for details of the project. This is due to the fact that new construction that adds value to the property will generate a one-time supplemental assessment representing the market value of the new improvements. In your case, only the value of the new 500sf is added to your assessed value. Your propertyâ€™s â€œbase year assessed valueâ€ (structure and land) remain unchanged.
The timing/completion of the remodel also influences this reassessment as follows:
Each year, on January 1st, County Assessors determine the market value of all residential properties (however, each propertyâ€™s value, and therefore its amount of tax, is controlled by Prop 13, which you can read about below) If the construction is ongoing on the first of the year, an estimate of the value of the partially complete construction is made and entered on the next assessment roll. When construction is complete, the base year assessed value is determined and a supplemental tax bill is issued for the difference between the value as of the date construction is completed, and the value that existed on the assessment roll.
"Estimating Property Taxes in CA" http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/