Deciding whether to finish a basement or leave it unfinished is a significant choice for homeowners. A finished basement can add valuable living space and potentially increase your home’s value, while an unfinished basement offers flexibility and cost savings. This guide will explore the pros and cons of both options, helping you determine which choice aligns best with your needs, budget, and long-term goals for your home.

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What Constitutes a Finished Basement?

Any “finished basement” has been upgraded from storage space to a livable area on par with the rest of the house. Unlike an unfinished basement, a finished basement should be fully insulated, waterproof, and just as comfortable and functional as the home’s main floors.

Heating and Cooling Systems

Finished basements have access to HVAC systems, while unfinished basements have inferior or nonexistent climate control. Proper heating and air conditioning make a finished basement comfortable and prevent problems that are common in unfinished basements, such as dampness or excessive cold.

Walls and Flooring

Finished basements mirror the aesthetics of the rest of the house and have fully finished walls complete with drywall, insulation, and paint or wallpaper. That means no exposed studs, pipes, or electrical systems, which are visible in most unfinished basements. 

Flooring in a finished basement is a step up from an unfinished basement’s concrete flooring. A finished basement’s flooring could be carpet, tile, vinyl planks, or hardwood.

Access

A finished basement should have a well-constructed and well-lit staircase, often with handrails, that connects the main floor to the basement. Egress windows or walk-out entrances are common in finished basements and may be required by local building codes, particularly if the basement includes an extra bedroom. A finished basement cannot be included in a home’s total square footage without these features.

Other Requirements

If you want to advertise a fully finished basement when you sell your house, you must ensure that it meets all federal, state, and local requirements. A licensed real estate agent, home inspector, or contractor can walk you through the upgrades required to transform an unfinished or partially finished basement into a livable space. Contact your local building department for more information.

Building codes spell out requirements for room dimensions, lighting, ventilation, and insulation. Virginia, for example, requires ceilings that are at least 7 feet above the finished floor, rooms that are at least 70 square feet, and rooms that have at least one exit. Consider that it could be a significant investment to dig out a basement large enough to have 7-foot ceilings or to excavate to install an exterior door or window in an older home.

For a quick visual of what goes into finishing a basement, check out the video below. General contractor Tom Silva demonstrates how to perform a condensation test to check for moisture issues, plug small cracks in the foundation, install insulation, and frame out the walls for drywall.

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Advantages of Finishing Your Basement

Transforming your basement into a finished living space offers several compelling benefits that can improve your home life and property value. They include the following:

• Improved home value: A well-executed basement finish can significantly boost your home’s market value. According to the National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI), homeowners can expect an average 86% return on investment for basement finishing projects. This added value, combined with the increased square footage, can make your home more attractive to potential buyers if you decide to sell in the future.
• Increased living space: Finishing your basement effectively expands your home’s usable area, providing extra room for various purposes. This additional space can be tailored to your family’s needs, whether it’s a home office, second living room, spare bedroom, home theater, or game room. The versatility of this space allows you to adapt it as your needs change over time.
• Potential for additional income: If local zoning laws permit, a finished basement can open up opportunities for generating extra income. You could create a separate rental unit or list the space on short-term rental platforms such as Airbnb. This potential for passive income can help offset the initial costs of finishing the basement and provide long-term financial benefits.

Drawbacks of Finishing Your Basement

While finishing a basement offers many advantages, think about these potential downsides before embarking on this home improvement project:

• High upfront costs: The initial investment required to finish a basement can be substantial. Homeowners typically spend between $7 and $23 per square foot, with total costs ranging from $15,000–$75,000 depending on the size of the space and the quality of finishes.* This significant expense may not be feasible for all budgets, especially weighing other home improvement priorities.
• Maintenance considerations: A finished basement requires ongoing maintenance to keep it in good condition. This includes regular cleaning, potential repairs to drywall or flooring, and addressing any moisture issues that may arise. The added living space also means increased energy costs for heating and cooling, which should be factored into long-term budgeting.
• Potential for moisture issues: Basements are naturally prone to moisture problems due to their below-grade location. Even with proper waterproofing measures, there’s always a risk of water intrusion or humidity issues. These problems can lead to mold growth, damage to finishes, and costly repairs. Homeowners must be vigilant about monitoring and addressing any signs of moisture to protect their investment in a finished basement.

*Cost data throughout this article was sourced from contractor estimates used by Angi.

Benefits of Keeping Your Basement Unfinished

While finishing a basement offers many advantages, there are compelling reasons to consider keeping your basement in its unfinished state:

• Cost savings: The most obvious benefit of an unfinished basement is the significant cost savings. By foregoing expensive finishes, flooring, and climate control systems, homeowners can allocate their budget to other home improvement projects or savings goals. This option is particularly attractive for those who don’t have an immediate need for additional living space.
• Easy access to utilities: One of the key advantages of an unfinished basement is the easy access it provides to important home systems. Exposed beams, pipes, and electrical wiring make it simpler and more cost-effective to perform maintenance, repairs, or upgrades to your home’s infrastructure. This accessibility can save time and money on future home improvement projects or emergency repairs.
• Flexible storage options: Unfinished basements provide ample storage space for seasonal items, tools, and bulky possessions that don’t require a climate-controlled environment. The open layout and exposed structural elements make it easy to install shelving units, pegboards, and other storage solutions. This flexibility allows homeowners to maximize the utility of the space without the constraints of finished walls and floors.

Factors To Consider When Deciding

Making a choice between a finished and unfinished basement requires careful consideration of several key factors that will impact your decision. They include the following:

• Budget constraints: Evaluate your financial situation and determine how much you’re willing to invest in your basement. Finishing a basement is a significant expense that should be weighed against other financial priorities. If the cost of finishing would strain your budget or delay other important goals, maintaining an unfinished basement might be more prudent.
• Current and future space needs: Assess your family’s current living situation and anticipate how your space requirements might change in the coming years. If you’re feeling cramped in your current living areas or expect your family to grow, a finished basement could provide the extra room you need. Conversely, if you have adequate living space and value the storage potential of an unfinished basement, leaving it as-is might be the better choice.
• Local real estate market: Research the housing market in your area to understand how a finished basement might impact your home’s value. In some markets, finished basements are highly desirable and can significantly boost resale value. Others may not yield as strong a return on investment. Consult with a local real estate agent to gain insights into buyer preferences and market trends in your neighborhood.

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Cost Analysis: Finished vs. Unfinished Basements

Most homeowners pay $7–$23 per square foot to finish their basement. The average price is $32,000, but anything from $15,000–$75,000 is within the normal range.

Your costs will depend on the size and condition of your basement as well as your design choices. Permit fees, building codes, labor rates, and material costs also vary by location.

To give you an idea of what to expect, here are a few potential costs:

Potential Return on Investment

While finishing a basement requires a significant upfront investment, it can offer a strong return when it’s time to sell your home. According to recent data, homeowners can expect to recoup about 70%–75% of the cost of a basement remodel. This potential increase in home value should be factored into your decision-making process.

Hidden Costs

When budgeting for a basement finishing project, be aware of potential hidden costs that could impact your overall expenses:

• Asbestos or mold remediation in older homes
• Permits and inspections
• Structural repairs or reinforcements
• Upgrades to electrical panels or plumbing systems
• Waterproofing and moisture control measures

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DIY vs. Professional Basement Finishing

Deciding whether to tackle basement finishing as a do-it-yourself (DIY) project or hire professionals depends on your skills, time, and the complexity of the work involved.

Tasks Suitable for DIY

Some aspects of basement finishing can be manageable for experienced DIYers:

• Basic framing for non-load-bearing walls
• Installing baseboards and trim
• Installing pre-hung doors
• Laying floating floors
• Painting walls and ceilings

When To Hire Professionals

Certain tasks are best left to licensed professionals for safety and code compliance:

• Electrical wiring and panel upgrades
• HVAC system extensions
• Plumbing installations
• Structural modifications
• Waterproofing and moisture control

Permit and Code

Before starting any basement finishing project, research local building codes and obtain necessary permits. This helps your project meet safety standards and avoid potential legal issues or complications when selling your home. Professional contractors can often help navigate the permitting process and make sure all work is up to code.

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Our Conclusion

While a finished basement may not quite pay for itself, it will likely give your home an edge when you’re ready to sell. Unfinished basements, with their concrete floors and exposed elements, lack the comfort and appeal of a finished living space. Beyond that, an unfinished basement represents a significant amount of underutilized space. 

Transforming your basement into extra living space may be worth the investment for your family regardless of resale value. You may even be able to cut costs by DIYing certain parts of the project. However, it’s important to research the housing market, remodeling costs, and building codes in your area before making a decision.

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FAQ About Finished vs. Unfinished Basements

What are the best features in a finished basement?

The best features in a finished basement depend on your needs and what buyers look for in your area. Here are a few suggestions:

• Wet bar or kitchenette
• Built-in shelves
• Egress windows
• Heated floors
• Home gym
• In-law suite
• Open layout
• Rec room
• Recessed lighting
• Soundproofing
• Storage space

Do I need permits to finish a basement?

You may need building, plumbing, electrical, and mechanical permits, plus an inspection, to ensure everything is up to code. The specifics of your project will dictate which permits you need.

Do finished basements flood easily?

Basements flood more easily than other areas because they’re the lowest level of the house. However, finished basements do not flood more easily than unfinished basements.

Is an unfinished basement livable?

An unfinished basement is not considered a livable space but can be used for storage, laundry, and other activities. If you plan to use your basement as a regular living space, you will need to invest in aesthetic and safety upgrades.

Why do people leave basements unfinished?

People may leave their basements unfinished for a variety of reasons:

• Building codes
• Cost savings
• DIY limitations
• Flexibility
• Lower maintenance
• Moisture concerns
• Resale considerations
• Storage space

Is an unfinished basement worth it?

Whether an unfinished basement is worth it depends entirely on your needs and priorities. An unfinished basement offers significantly more storage space than a crawl space, and it’s more affordable than a finished basement. It also gives you the ability to expand your living space in the future.

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