What Is Considered A Finished Basement?

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

A finished basement 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 basement means following a set of building codes that are more strict for the basement than the floor above it. In this article, we’ll take a closer look at what is and is not considered a finished basement.

What Is Considered A Finished Basement

What is an Unfinished Basement?

An unfinished basement is a below or partially below-grade basement that does not have finished walls, ceilings, or floors. It also does not have utilities such as plumbing, electrical, or HVAC. A basement 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 basement as a whole.

What Is Considered a Finished Basement?

A finished basement 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 basement.

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

Floor and Ceiling

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


What is a finished basement

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


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


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

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

Some people do not like covering their basement 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.


Lighting a basement must be according to the building code. Some municipalities will have specific guidelines for lights in a basement, 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.


When the basement is finished, it is not required to have a specific number of rooms or bathrooms. A finished basement 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 basement. You can still have a finished space, however.

Is a Finished Basement 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 basement square footage”.

Just because a finished basement isn’t included doesn’t mean you don’t have added value to your home. If you’ve taken out permits to finish a basement, 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 basement will always sell for more than the same home without a finished basement.

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 basement is finished. You’ll still reap the benefits of the basement reno when it comes time to sell.

Does Finished Basement Increase Property Tax?

What makes a basement finished

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 basement 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 basement. 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 Basement Add Value?

A finished basement adds just under 70% of the value spent on a finished basement. If you’ve spent $40,000 to finish your basement, 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 basement adds tremendous value to the home, but it can vary depending on what you’ve put in the finished basement. 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 Basement (Semi-Finished)?

A partially finished basement 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 basement. 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 basement.

Finished vs. Unfinished Basement: Which Is Better?


Finished vs unfinished basementA 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 basement, but it is worth the cost for most people. Don’t forget the efficiency savings that come with insulating and finishing your basement space, too.

The overall benefits of finishing a basement include:

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

An unfinished basement works for those who simply don’t need the space or do not have the funds to finish the basement. 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 basement, 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 basement with the knowledge that there won’t be any hidden surprises.

The benefits of not finishing your basement are:

  • Lower property tax
  • Savings from not paying to finish the basement
  • 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 basement. 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.

Written By: Yevgen

YevgenI'm a DIY nut, and the founder and chief editor here at Weekend Builds.
This site is a result of my DIY passion, and to share the joys I have experienced fixing, building, and creating things over the years.

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