You may have heard the term “Barndominium” or “Barndo” around the housing market recently, and that's not a real surprise as working from home and wanting extra space, in general, has become more important to homeowners!
The idea of a barn converted into a living space has really grown in popularity over the last couple of years. But with all the romanticized notions of living in a beautiful barn put to one side, what are the practical elements to a barndominium?
This is what we are looking into for you. Most importantly we are going to break down and understand how Barndominiums are taxed, as well as other payments you will have to consider before taking the plunge into barnyard life.
What is a Barndominium?
As the name suggests, a Barndominium is a converted barn. They are metal buildings that have large inside living quarters and are meant to be affordable, energy efficient and low maintenance.
If you are struggling to imagine a barndo, think of a warehouse, but instead of a grey building with harsh lighting, see an open space home with an abundance of room. With all that square mileage, you might think that Barndominiums have a large housing tax price, or you might think that because they were originally a barn, that there would be no tax at all.
Let’s figure this out and smoothen the confusion
Do you have to pay taxes on Barndominiums?
The taxation process we will be looking at is centered around the United States of America. Each state will have its own tax system, but in general, what you read here should be a close match to the reality you are looking at.
Before we start looking at taxes, it’s important to remember that taxation pays for everything in the public sector. It pays for schools, roads, police, and so on. Without taxes, the country would not be able to look after its citizens and there would be no resources to maintain our lifestyles.
Property taxation for the US started in 1796 and it includes homes, farms, business premises, and anything else that is seen as property. This means that Barndominiums are included in property taxes This brings us to our next important question, how are Barndominiums taxed?
How are Barndominiums Taxed?
Once again, each state is different and the laws that surround your state might vary. But we will be looking at the general taxation of a Barndo, to help you calculate if the tax costs are worth the change in home life for you.
There are two ways in which tax assessors will consider your property when evaluating your home. Those are the dimensions of the land on which the barndo stands on, and the actual living space within the property. If the assessors use the living space as a marker, then they will leave our part of the property like the shop or driveway.
By asking your advisor you should find out if the local tax assessors would look at dimensions or actual living space. If they go by dimensions, then the tax of the barndo will likely be very high if the property is large.
If the barndominium is out in the countryside, then the tax office might not come to look at the property. If this happens, what the assessors will do is look at the other properties in the area which are similar to the barndo, and they will tax your new home based on what has already been decided as appropriate.
This is why it is always a good idea to ask others in your area what their property taxes are. Even if the tax office doesn’t use the same tax amount, it will help you estimate what your property tax will be like.
If the tax office then gives you a taxation value that is much higher than your neighbors, you can contest the assessment by saying that your neighbors aren’t paying that high amount, so neither should you.
Are Barndominiums tax deductible?
One way to get around massive property tax bills is to qualify for an exemption. Exemptions are different across each state, but your local tax authority can give you information on what makes a property tax exempt.
In most states, religious and government buildings are tax exempt, but many states also give exemptions to senior citizens, veterans, or people with disabilities.
Check out your local taxing authority, because some tax offices can allow you to qualify for an exemption from property taxes if you can prove that your barndo is part of your agricultural business.
This might be a long stretch, and if your barndo is nothing to do with agriculture it may be completely irrelevant to you, but check them out anyway, as this information is available to you and could save you a lot of money!
Lower Insurance Premiums with Barndos
Insurance companies, unlike tax assessors, don’t look at the total area of a house. Instead, they look at the value of the house and the likelihood of damage. If you look at a conventional home and a barndo that are in the same area, you will see that the barndo will have lower insurance premiums. This is because of the value of the home.
In general, the average barndo is valued much lower than a conventional house. Because the home is worth less, the insurance will be less too. So with all things considered equal, your home will be more affordable monthly, if you were to have a barndo.