Investopedia says that making your house look pretty is likely to cause an increase in taxes.
..more attractive homes often receive a higher assessed value than comparable houses that are less physically appealing.
Is the above claim true? If so, why? What logical explanations are there for such practice (in the places where it is practiced)?
Property taxes are generally based on the value of the house as determined by the tax assessor at the time that value is reassessed. Different places have different laws and rules that govern how the assessor determines the value of the house, but, as the article says, since the assessment is done by a human being, there will always be some subjectivity in the outcome.
The reason the concept of "curb appeal" exists is that the market shows that houses that look nice and/or fancy sell for more than identical houses that are ugly or messy. Thus, it's logical that, unless there were laws or regulations that prevented this, a pretty looking house would be judged to be worth more than an ugly house – and, therefore, face a correspondingly higher tax bill when reassessed.
This is why there's no "beauty tax" – it's just a side effect of pegging property taxes to value and the effect of "curb appeal" on property value
I get an assessment from the county I live in every year, telling me what the state thinks my house is worth. I am then assessed a property tax based on that. If I made major improvements to the property, my taxes would also go up.
While that sounds counter-intuitive, it's not really a bad practice. Logically, taxes are based on the value of an item. Remember also that I can derive direct benefit as well. If I sell my house for more than I purchased it for and make a profit, I have obtained something I desired as well.
In most countries, however, there are typically tax benefits to owning a home. I get a reduced tax rate because I live in the home. In the US, if I lived in it 2 of the last 5 years (with a few restrictions), I pay no capital gains tax on any profits. The benefits favor my improvements far more than the property tax assessment.
In general, tax assessors cannot go inside homes to evaluate them. So the only information that the tax assessor has relate to
A side effect of this is that if you put a lot of money into the exterior of the home and very little money into the interior, you will have a higher assessment than someone who puts all their money into the interior and none in the exterior. Because the tax assessor will assume that you put money into the exterior and interior proportionately. So when they see a nice exterior, they assume a nice interior.
Another way to say this. There is no explicit tax on having a nice home exterior. But an implicit effect of having a nice home exterior is that the comparable houses will be more expensive.
