How Are Barndominiums Taxed?

Written By: Larry Haggerty

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Property taxes are how the government funds many local services such as schools, roads and emergency personnel. Building or purchasing a barndominium will not get you out of paying your share of property taxes.

Due to the unique type of structure of a barndominium, usually because it’s a workplace and home all in one, they can be taxed differently than traditional homes. Understanding how your barndominium will be taxed can help you plan your budget and avoid any surprises come tax time.

Key Takeaways

  • Barndominiums are taxed based on the assessed value of the property which takes into account factors such as size and improvements.
  • Taxation of barndominiums can vary depending on the state and local laws.
  • The layout and usage of your barndominium can impact your property taxes and even reduce them.

Barndominium Taxation Basics

The amount you will pay in property taxes is based on several factors and these factors can vary depending on where you live. You should look up your local ordinances and property tax millage rates to get a true estimate of what your property taxes may be.

The total amount you pay will be based on the assessed value of your property which will be determined by your county tax assessor.

Property Tax Assessment for Barndominiums

The assessment process for a barndo is very similar to that of a traditional home. The assessor will consider factors such as size, condition of property, value of land and the total cost of construction. The assessor may also take into account any energy-efficient features such as windows, heating systems (geothermal) or even items like solar power.

Barndominiums, in most states, tend to carry a higher property tax than normal wood homes due to the larger square footage many of these have. The popularity of barndominiums is driven by how customizable your home can be and many include a large square footage workshop or storage area on top of an already larger living space.

You’ll have to talk with your assessor to see what’s actually included as many do not include unheated areas, such as a storage area, in the total square footage calculation. This can make a significant difference in your tax bill.

You can usually find a “Property Tax Estimator” on your state website to help understand what your taxes might be.

It’s also worth noting that some states and counties offer tax relief or exemptions for agricultural businesses which may include barndominiums used for farming or livestock. If you believe your property has been over-assessed, you may be able to appeal the assessment with the help of a tax appraiser or attorney.

Factors Affecting Barndominium Taxation

There are several factors that can affect how much you will pay in property taxes. In this section, we will explore some of the most important factors that you should be aware of.

Barndominium Construction and Valuation

The construction materials used and value of those materials can have a significant impact on your property taxes. For example, if you built your barndo with a prefabricated kit then you may pay less in taxes compared to a custom built barndo.

The indoor and outdoor aesthetics of your barndominium may also increase your assessed value and that will raise your property taxes.

Barndominium Floor Plans

The floor plan you choose for your barndominium is the second most impactful factor when it comes to assessing the value of your new home. For example, if you have a larger square footage home then you will pay more in taxes compared to a smaller one.

The actual layout of the barndo can affect the final assessed value based on what it’s used for, if it’s heated, etc. The assessor will review all building plans before giving it the initial valuation.

Energy Efficiency and Utilities

Building an energy efficient home can be great for the environment and your checkbook at the end of the month. Taking advantage of energy efficient systems like solar panels or geothermal heating can reduce your monthly bills substantially depending on usage.

These same energy efficient appliances or systems can have a large tax incentive. There’s currently a 30% tax break installing a new solar system or other similar energy efficient improvement to your home.

However, these fancy systems also tend to drive up the assessed value of the home since they are great for resale value. For example, in some states a fully functional solar panel system can raise the value of a home 5-10% compared to without.

Frequently Asked Questions

How are barndominiums taxed compared to traditional homes?

Barndominiums are taxed similarly to traditional homes. However, the tax assessment for a barndominium may be different from that of a traditional home due to the unique features of a barndominium. For example, the tax assessment may take into account the size and layout of the living space, as well as the size and layout of the barn or garage space.

Do I need to pay property taxes for my barndominium?

Yes, you will need to pay property taxes for your barndominium. Property taxes are based on the assessed value of the property, which includes the value of the land and any improvements made to it, such as a barndominium.

Are there any tax breaks for building a barndominium?

There may be tax breaks available for building a barndominium, depending on the location and the intended use of the property. For example, some states offer tax incentives for building energy-efficient homes, which may include barndominiums. It is best to consult with a tax professional to determine what tax breaks may be available to you.

Does the location of my barndominium affect how it is taxed?

Yes, the location of your barndominium can affect how it is taxed. Tax rates and assessment methods vary by county and state, so it is important to check with your local tax authority to determine how your barndominium will be taxed.

What deductions or credits can I claim for my barndominium on my taxes?

You may be able to claim deductions or credits for your barndominium on your taxes, depending on its use and features. For example, if you use your barndominium for business purposes, you may be able to deduct a portion of your expenses related to the property. Additionally, if you have installed energy-efficient features in your barndominium, you may be eligible for tax credits. It is best to consult with a tax professional to determine what deductions or credits may be available to you.

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