I am not an expert nor have I looked into this recently but while I believe the state has a 50 ft. setback, I think you CAN add a floor to an existing structure within the setback HOWEVER, the towns have a LOT of control as to what can be done and WHAT the towns allow can vary over time with no real written rule changes or so it seems. At one time in Moultonborough you couldn't add height. Then later, you could. Also, the builder you use can make a big difference. Some have better relationships with the various town agencies and seem to have more leeway.
So, it depends.