The 50% Rule For Property Improvements


Protect Your Home And Value While Circumventing Flood Rules

  1. Determine the flood zone
  2. If it is anything other than X, identify the improved value.  You can find this here:
  3. If you want to challenge the value of the improvements you get an appraisal (a 50% appraisal or a FEMA appraisal)
  4. If you need help navigating this contact us

Are there restrictions for home owner’s upgrading their homes?

You might think that when you own property, you can do whatever you like, especially when it comes to home improvements.

This isn’t the case, and in some parts of Naples, Florida, there are significant restrictions on changes homeowners can carry out at home.

Whether you safeguard your property or want to add value, you must act per the regulations and be aware of the 50% rule.

If this is new to you, or you need assistance determining how it impacts you, don’t worry. Naples Relocation Experts are here to ensure you make the wise decision, no matter what you wish to do.

A Custom, waterfront home in Naples, FL
Custom home in Naples, Florida.

What is the 50% rule?

As a regulation of the National Flood Insurance Program, the NFIP, the 50% rule prohibits property improvements of more than 50% of the property value UNLESS the structure fully complies with flood regulations.

How is the rule applied in Naples?

Of course, it’s not enough to know the FEMA 50% rules; you need to understand how they apply in your chosen area. At Naples Relocation Experts, we care about Naples, and if you do too, we have all the information you need to know.

The City of Naples reviews improvement or structural repair costs in one year when determining compliance with the FEMA 50% rule. In valuing a property structure, the City of Naples begins with the assessed value from the Collier County Property Appraiser’s assessed value, adding 20% to this figure.

However, the property owner has the right to arrange and offer an independent appraisal, which a licensed appraiser should undertake.

Waterfront Homes in Naples

The location of your property matters

Suppose the property is in a Special Flood Hazard Area (SFHA) and is below the appropriate flood elevation. In that case, the local regulations and codes will impact how you remodel the property.

When a building sustains structural and/or interior damage, local regulations and codes also impact any building work you hope to carry out.

What is substantial damage?

Substantial damage refers to structural damage where the cost of restoring the structure to its condition before it was damaged would cost at least 50% of the market value.

When it comes to the market value, don’t be misled by most of the property market listings you see. When a company such as states the median listing home price in Naples, Florida, this is the value of the land and structure. 

In this instance, the value of the land is irrelevant, you are only interested in the value of the structure. From there, review the cost of restoring the structure in line with the structure value.

If the property structure value was $4m; half of this is $2m. So, if the cost of restoring a property at this price was $2m or higher, it could be classed as a property with substantial; damage.

What is substantial improvement?

Substantial improvement refers to any property modification, addition or reconstruction where the costs are at least 50% of the property’s market value before improvement work begins. Again, the same restraints are in place, it is the structure value which matters, not the land and structure value.

Any building project that is a substantial improvement or damage must comply with the City of Naples flood damage prevention regulations.

A carpenter cutting wood for a home upgrade in Naples, Florida
A carpenter cutting wood for a home improvement project.

What costs must be included when determining substantial improvement and damage costs?

There is a range of costs which must be included when determining substantial improvement (SI) and substantial damage (SD). Knowing the costs which must be included is essential in minimizing issues, nasty surprises and significant financial implications.

Of course, knowing the costs which can be excluded is also helpful, reducing that figure.

Some of the leading costs which must be included are:

  • Labor
  • Material
  • Site preparation
  • Demolition and debris removal
  • Costs relating to regulatory compliance matters
  • Costs associated with elevating a property when the initial or proposed elevation was lower than the BFE
  • Site supervision and management costs
  • Material sales taxes
  • Structural matters and exterior finishes such as foundations, bearing walls, roofing, guttering, windows, exterior doors
  • Interior finishing elements such as Bathroom tiling, doors, bookcases, insulation and hardware
  • Utility and services equipment

This list represents a significant number of costs, which means this sum can become considerable.

What costs can be excluded when determining substantial improvement and damage costs?

In general, costs that aren’t directly linked with the building can be excluded, including:

  • Clean-up and trash removal costs
  • Temporary stabilization costs
  • Costs associated with preparing plans
  • Land survey costs
  • Permit feeds
  • Carpeting
  • External improvements such as pools, yards, paths
  • Appliances which are plugged in such as washing machines or stoves

How to determine costs and values?

There are some acceptable methods of determining costs, including:

  • Itemized costs of labor and materials, or estimated costs provided by licenced professionals
  • Information provided by building code organizations and recognised professionals in the building cost-estimating sector

Does these only impact people who plan on improving the structure of their property?

No, this impacts all property owners. If you plan on improving the structure of your property, it is an important issue to consider, but it impacts all property owners. This is a crucial factor determining the overall value of your home, which carries implications for insurance, remortgaging purposes, and of course, it is an issue when you come to sell your home.

Naples Relocation Experts, Drew Josephson (left) and Andrew Ventura (right).

Can you get around the FEMA 50% rule?

While the 50 % rule is well-quoted and applied across the board, there are ways around it. This shouldn’t surprise you; regardless of the regulations, there is almost always a loophole or workaround that provides you with more flexibility than you’d expect.

Of course, you can’t just press ahead and hope for the best. That approach costs you a lot more money and inconveniences down the line. It would be best if you never started work without a permit or without having a professional appraisal in place.

You need to plan your approach, which is why working closely with skilled and experienced professionals in this field is best. We have a good working relationship with Ray Carroll from Carroll & Carroll, Real Estate Appraisers & Consultants. They’ve been operating since 1984; and are as well informed about the FEMA 50% rule and how it applies in Naples, Florida, as anyone can be. They’ve also got a sterling track record in ensuring homeowners manage their property per the regulations, but perhaps pushing harder than others think is possible.

The bottom line is, Ray Carroll is the unquestionable expert on this matter in the county, and perhaps even the United States. If you want the best in your life, take advice from the best and surround yourself with the best people. When it comes to working around the FEMA 50% rule, you’ll get the best support here.

The 50% rule and its limitations sound daunting for homeowners, but it doesn’t have to be the case. Working with experts gives you confidence and ensures you have fewer things to worry about, no matter what your next move is.

With Naples Relocation Experts, you are always in safe hands, and we’ll help you manage your property or relocation to a high standard.

Drew Josephson
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