Budgeting for Building Permits

October 4, 2019

As you know, having a budget in place is very important for constructing a home, remodeling a home, and even purchasing a home. Therefore, you must have an amount of money in mind before you start to tackle any of these things. However, did you know that in addition to materials and labor, you must also figure in the cost of building permits?

What You Need to Know About Building Permits

If you are not aware of building permits, they are documents that give you permission to do any type of work on your property. The local government in your area will have their own standards when it comes to land, health, and safety, and these permits ensure that those standards are met.
You will usually not need a building permit if you are only doing minor work around your home, but larger projects, and those that entail adding on, require them. You must check to see if you need a building permit for the project you are working on, because every state, county, and city or town have their own requirements. If you find that you do need one, you must also find out where they can be obtained.

Cost of Building Permits

Your local municipality will determine how much your building permit will cost. Every area is different, so we cannot give you an exact price tag, but the permits are normally between $440 and $2,000. You may live somewhere that charges much less or a lot more.
While the location where you live plays a huge factor in the price of a building permit, there are a few other factors that need to be taken into consideration. Those factors are:

  • The age and the size of your home
  • The complexity of the remodeling that is being completed
  • The fees for inspection
  • The number of permits you require
  • The value of the work that is being performed on your home
Those factors can greatly affect the price for the building permit that you need.

Budgeting for Building Permits

Since building permits are not always cheap, forgetting to budget for them can completely ruin a project, because you won’t have enough money left to do all the work that you wanted to. It is recommended that you work closely with your contractor to determine which building permits are needed and then find out the total cost. This ensures that you can set that money aside in your budget before you use it for something else.
You should also find out if your contractor will obtain the building permits or if that job will fall on you, the homeowner. If you think that your contractor is getting them, and they think you are, your project could end up delayed well before it even starts. Most of the time, the contractor will take care of the building permits and add the price into your contract but verify that to avoid problems later on.

Breakdown of Your Budget

Here is a normal breakdown of a budget for remodeling:

  • 10-20% for the basics, which includes flooring, drywall, and framing
  • 10-20% for electrical and plumbing
  • 30-70% for materials and installation
  • 5-10% for miscellaneous expenses that include building permits and unexpected issues

It is important that you stay within your budget, so please make sure that you plan for all the expenses that you will face during the project. While your contractor should bring up building permits early on, you can also do the same since you now know that they are necessary for almost any construction project.

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