DEAR MR. MELTZER: We live in a rather crowded residential area and have lived here since before our first child was born.

We now have four growing children and the walls of our house are bursting. We are considering fixing up a play room in the basement, building a patio, adding a den for my husband so he can have some privacy in his work, etc.

Since this will cost a great deal of money, and since we are in an area where our neighbors have not done much to improve their homes, do you think we should seriously consider going ahead with this venture? We are concerned about getting our investment back if and when we decide to sell the house.

ANSWER: I have answered this question many times, and I will give you the same reply I always give. Generally speaking, you will not fully recover your investment when you sell the property when you speak of improvements beyond the basic structure. This is especially true in cases like yours, since you say that other houses in your neighborhood have made few improvements.

An exception to this would be if you were living in an area of older houses which were being greatly upgraded, or if you were planning fairly inexpensive improvements in a neighborhood containing custom built houses.

Another exception would be if you plan to remain in your present house for a long time. Even if you were to look forward to a loss in the distant future, that loss could be offset if you had the benefits of long time living in that house.

DEAR MR. MELTZER: In 1963 we bought a little two room house for $6,500. The property was reassessed for the purchase price of $6,500.

In 1970 they rezoned the property for commercial use and raised the assessment to $23,300. Since 1970 we have been trying to sell it and have found no willing buyers. Since we are living on Social Security and find it difficult to make ends meet, we would like to find out how to correct this unjust taxation.

ANSWER: Assessments are supposed to be based on market value. If your parcel is not marketable as a commercial property, the assessment is no doubt incorrect.

There is no better evidence than the past seven years of non-productive sales activity. File a tax appeal. If this doesn't work, you may have to weigh the economics of taking the case of a higher court.

Bernard C. Meltzer is a realtor, engineer and appraiser. He does not answer letters personally but only through this column. His address is Suite 900, 112 S. 16th St., Philadelphia, pa. 19102.