In Paradise Valley, where Floor Area Ratio (FAR) caps building area at 25% of the net lot area, the most useful exception to know is this: a fully subterranean basement generally does not count toward FAR. That makes a below-grade basement one of the only ways to add finished square footage beyond the 25% limit.
This is a general overview, not zoning or legal advice — the Town of Paradise Valley defines these terms precisely, and your architect should confirm what qualifies for your specific lot.
Why basements matter so much here
Paradise Valley is almost entirely built out, and its 25% FAR is stricter than many luxury buyers expect. On a one-acre lot (43,560 sq ft), FAR allows about 10,890 sq ft of above-grade building area — and that figure has to cover everything under roof: living space, garages, covered patios, and more.
A basement changes the math. Because a fully below-grade level is excluded from FAR, it lets you add space the 25% cap would otherwise prevent — a home theater, gym, wine cellar, golf simulator, or guest suite — without spending your above-grade allowance.
What counts toward FAR, and what doesn't
Generally counts toward FAR: the roofed footprint of the first floor, any second story, garages, covered patios, roof overhangs, accessory structures (such as guest houses), and certain courtyard and trellis areas.
Generally excluded: a fully subterranean (below-grade) basement.
The catch: it has to be truly below grade
The exclusion applies only to space that is genuinely below natural grade. The moment part of a lower level is exposed above grade, that exposed portion can count toward FAR. The common ways this happens:
- Walkout basements — where the lower level opens at grade on the downhill side of a slope
- Light wells and window wells — egress and daylight openings that expose basement walls
- Hillside and sloped lots — where natural grade varies across the site, making the below-grade determination complex
How the Town measures grade, and how it treats partially exposed walls, is technical and especially nuanced on hillside parcels. This is exactly where an experienced architect earns their fee.
Two quick examples
- Flat one-acre lot: Build to roughly the 10,890 sq ft FAR maximum above grade, then add a fully subterranean 3,000 sq ft basement — total finished space well beyond what FAR alone would allow.
- Hillside lot: A lower level that opens to a view on the downhill side is partly above grade, so that exposed area likely counts toward FAR — and the design has to account for it from the start.
Before you count on it
- Confirm the basement design qualifies as fully subterranean with your architect and the Town of Paradise Valley.
- Budget for excavation, shoring, waterproofing, and engineering — basements add cost, though often less than the value of the space they add.
- Note that our Dream Home Estimator calculates buildable area from the 25% FAR only; it does not add basement area.
For the full picture on building here — FAR, construction cost tiers, and timeline — see our guide to building on your lot in Paradise Valley. If you are weighing a specific lot and want to understand its basement potential, a member of our team is happy to walk through the numbers with you.
Town of Paradise Valley resources: Article 10 — Height & Area Regulations and Floor Area Ratio (FAR) Certification.
Frequently asked questions
- Do basements count toward FAR in Paradise Valley?
- Generally, no. A fully subterranean (below-grade) basement does not count toward Floor Area Ratio in Paradise Valley, so it can add finished square footage beyond the 25% FAR cap. The space must be genuinely below natural grade; any portion exposed above grade can count.
- How much extra square footage can a basement add?
- It depends on the design, but because FAR caps above-grade building area at 25% of the net lot area, a below-grade basement effectively lets you add living space — a gym, theater, wine room, or guest suite — without consuming your FAR allowance. Its size is limited by the home's footprint, excavation, and engineering rather than by FAR.
- Does a walkout basement count toward FAR?
- Often, at least partially. Walkout basements, light wells, and window wells expose part of the lower level above natural grade, and exposed above-grade portions can count toward FAR. How it is measured is defined by the Town and is especially nuanced on sloped or hillside lots.
- What counts toward FAR in Paradise Valley?
- FAR is broader than living area. It generally includes the roofed footprint of the first floor, any second story, garages, covered patios, roof overhangs, accessory structures, and certain courtyard and trellis areas. A fully subterranean basement is generally excluded.
Talk to a Paradise Valley specialist
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