I don't believe that it's automatically the total purchase price, though
they may be doing that in your town.

Sad, but true. They definately are doing that.

How soon it gets revalued
depends on a lot of things, but the longer it;s been since the last
one, the more likely one is coming soon.

No, they just did one in February. Another one due in 5-7 years.
According to the town hall, at least. New kitchen will not raise the
taxes. Finishing the basement, adding a bathroom or any room will do
so. Last time I had a tax assesor come to my townhouse, he simply
looked down into the basement staircase, saw that the basement wasn't
finished and left. Didn't look at our extended deck, just left. No
change in taxes.

Assuming you had a $400K
house and you ripped out the builder's kitchen and secretly put in a
new one, how much difference would it make in taxes? Assuming it was
a $40K valuation difference, that would result in maybe $800 a year
difference in property tax.

But that's just kitchen. Every option piles money on top.

At that rate, it's going to take a long
time to recover the cost of the cheap builder's kitchen that got ripped
out and more likely that a revaluation is going to occur first.

There's no cost of builders kitchen. The price of the house would
remain the same even if you told him not to put one in. Or as we saw in
previous example, he would give you a $1000 credit That's besides
the point, since he probably wouldn't get a CO anyway without one.

There's more. The choice of cabinets, countertops and appliances is
extremely limited when purchasing from the builder. Buyilders don't
negotiate on prices either. Also, any quality materials (read:upgrades)
will be grossly overpriced. Basically spending $40K on builders kitchen
and spending $40K with an outside contractor will get you VERY
different results. This I have already experienced.

And of course, finally, is that to do the kitchen renovation in most
areas of NJ requires a building permit. So, if you do it legally, they
are going to come and revalue the property anyway.

Sorry, I never heard of that. If new electrical or gas lines are
required, then I can see... but to change cabinets, countertops and new
appliances? I doubt it.