There is paneling in my kitchen from the previous owner. I wanted to paint the wall so I removed a section of the paneling and the wall beneath is wallpapered and is in pretty bad condition so I wanted to start fresh with new drywall. I was thinking of installing a .25 inch layer of drywall over the existing wall. Excluding the fact that I's be losing a quarter inch of space around the room, are there any other cons against doing this? Would I be better off removing the old drywall and starting fresh?

May need to add 1/4 spacer to door and window facing and put 1/4" extensions on electrical outlets and switches.

Thanks. I guess the only other question I have is does it negatively affect the value of your home to hang drywall over existing wall?

Yes it would be a draw back to some buyers. They will see it as a DYI lazy repair. They will wonder and be turned off by not knowing what you were hiding. If the old drywall is truly beyond repair the tear it out. Have you tried to remove and of the paper?

Definitely demo the old paneling. This way you will be able to easily locate the studs and line the drywall up appropriately to the studs... which is of the utmost importance when hanging drywall... also use 1/2 inch drywall. If I was looking to buy a house and knew that drywall had been installed over paneling, I would definitely wonder about the other "home improvements" that had been done to the house. Paneling is relatively easy to demo.

Yea I think I was leaning toward taking it out anyway. I haven't tired to remove any of the paper but it doesn't look like it will come off that easy. Also, I've removed wall paper before and I know how much of a pain that is, so I am probably just going to remove that old wall all together. I was only going to use the .25 inch if I installed over the old wall, I'll definitely use the half inch. Thanks for your input.

I would think it worth your while to test a small area for wall paper removal. Yes, it is a pain but removing the old drywall and new installation is no snap either, especially if you are great at mudding.