Property Taxes – Impact of green building on the calculation of Fair Market Value
For the purpose of property taxes, the square footage of a building is calculated from its external footprint. (At least it is in Canada anyway.)
The architect of the featured Passive house, Steve Bascek, describes the walls at being 18″ thick, which is almost a foot thicker than 2×6 construction. The property taxes resulting from that addition foot might very well negate the savings in energy cost.
For example, there is a 6% difference in building area between a two story 30’x40′ and a 31’x41′ house. Size matters, and that additional square footage could easily result in an increased tax bill of 4 or 5%. Thats hundreds of dollars in annual costs! Would that R50 18″ wall save you $350/year compared to a 2×6 wall insulated with spray foam?
Even if this green structure wasn’t initially penalized by the methods used to calculate Fair Market Value, eventually it will be sold and value of the green improvements will be reflected in the sale price then. The next owner will pay additional tax on them. His neighbours too.
There is much discussion on these forums whether a particular green upgrade is worth the additional capital cost. The additional tax costs should also be considered.