Are you looking to build your dream barndominium, but wondering how are barndominiums taxed? We are here to answer all your barndominium tax questions as well as share tips and answer helpful questions to save money on your barndominium taxes.
What are Barndominium?
A barndominium, or a barndo for short, is a building made of steel. They are metal buildings that have a large inside living quarters and are meant to be affordable, energy-efficient, and low maintenance. They are much more affordable than traditional homes which is super appealing to many families.
Do you have to pay taxes on Barndominiums?
Yes, barndominiums do have to pay taxes.
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.
Property Taxes help pay for:
- Police and Fire
- Water treatment faciilies
- Local Utilities
- and more.
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 is usually referred to as “real property tax”. It includes land, structures, and fixed buildings. Depending on the state and county that you live in will determine the amount of property taxes that you owe each year and when they are due.
Many people tend to pay their property taxes each month with their mortgage. The money is put into an impound account in which your mortgage company pays the taxes when they are due. Many families opt to do this to ensure they have saved enough money to pay their taxes each year.
If you do not pay your property taxes the local government may put a lien on your home which could eventually cause your home to go into foreclosure.
How Does Real Property Tax Work?
Both commercial and residential properties must pay property taxes. Barndominiums are typically taxed as residential properties.
To determine your property taxes your local government takes the current tax rate and the market value of your home to determine how much you owe.
This tax rate is known as a millage or a mill rate. A mill tax rate charges you $1 for every $1000 of the property’s assessed value by the county in which you live.
On average across the United States, the property tax rate is 1.1% or 11 mills. If the country asses your barndominium at $150,000 then you would owe $1650.00 in property taxes each year. This rate can and will change as your home increases in value.
Some states and counties have some tax exemption laws that you will want to take advantage of to help lower your taxes. I know Texas has homestead exemption laws as well as Veterans exemptions if you are a Veteran. Be sure to check in with your county and state to see if you qualify for any exceptions.
This brings us to our next important question, how are Barndominiums taxed?
How are Barndominiums Taxed?
How are barndominiums taxed is a question we hear a lot around here.
Barndominums are taxed based on the value of your property and your home. This is determined by your county tax assessor. They determine the estimated value of your property. This includes the land, homes, free-standing garages, barns, and sheds.
The county assessor may look at the following factors as well to determine the property value:
- Size of your property lot
- Location of property
- Square footage of the home.
- The number of bedrooms and bathrooms.
- Comparable properties in your area.
Note that one of the biggest determining factors when it comes to the value of your home is the size, otherwise known as the square footage.
Depending on where you live will determine how the assessor determined the square footage of your barndominium. Some assessors will not include areas that are not heated. Therefore your barn, workshop, or garage may be excluded which will lower the amount you owe on your taxes.
It is best to ask your local tax assessor about how they determine the value and the parts of your home that will be included in your property value if you have questions before you build.
Can You Appeal a Barndominium Tax Assessment
Throughout the United States, most local governments allow you to appeal your property taxes and the value of your home. You will need to file the proper paperwork within 30 days of getting your assessment.
Once you file the paperwork your local county will give you further details as to how the appeal of your taxes works and what you need to provide to them.
Please note if you do plan to appeal your taxes you need to give concrete evidence and facts as to why you think your home is valued at a lower rate than they suggest it to be. This could be reviewing other properties around you as well as letting them know if you have made changes to the property that lower the value such as removing a structure.
It is recommended that you work with a tax attorney that specializes in taxes if you plan to appeal your taxes.
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.
Tips for Lowering Your Property Taxes
Now that we know how barndominiums are taxed, if you are like me you are trying to figure out how to lower my barndominium taxes. These tips may help you lower your property tax bill.
- See if your local country offers exceptions: ie. homeowners exceptions, Veterans, Seniors, etc.
- Avoid improving your home and property.
- Research the value of homes and properties similar to yours that are near you.
- Walk with the assessor during the valuation of your home process.
Finishing Up: How are Barndominiums Taxed?
All property, even barndominiums, are taxed. Your taxes are based on your local tax rate as well as the assessed value of your home. After you get your appraisal value from the local assessor, you can appeal it if you choose. You want to be sure to look to save money on your taxes through exceptions and other tips that can help you save money.
If you are ready to get started building the barndo of your dreams, be sure to check out our barndominium floor plans to help you create the barndominium of your dreams or use a barndominium design software program to help you plan out your space for your new home. When in the planning stages be sure you also check out the barndominium financing and insurance options that are available. For more helpful tips visit our FAQ barndominium section as well to get answers to all your barndo questions.