Do You Have to Pay Taxes on a Barndominium? Reasons & Tips

Do You Have to Pay Taxes on a Barndominium
Do You Have to Pay Taxes on a Barndominium

If you are interested in joining the growing number of barndominium owners across the country, you’ll also want to know how the tax masters value these properties. Do you even have to pay taxes at all?

You have to pay taxes on a barndominium in most states across the US. The exact amount to pay will, however, vary from place to place. While some assessors only count the heated space in the structure to come up with a value, others take into consideration the size of the entire structure.

The rest of the article will cover all you need to know about paying taxes on a barndominium in the US. Watch out for tips on how to keep the costs down.

What Are Barndominiums?

A barndominium, also known as a barndo, is a mash-up of a condominium and a barn. At least that’s what they used to be a few decades ago when they were solely built for agricultural use only. Such barndos had a small living space, and in some cases, a shop. The situation has changed today.

A barndominium today still comes with the exterior metal-frames they are known for, but the interior can be designed much like a conventional house.

Why Are Barndominiums Becoming Popular?

Many people choose barndos for a variety of reasons. Some of these are covered below.

They Are Simple but Sophisticated

It all comes down to the tastes of the owner, but most barndominium homes are simple. There is no need for elaborate plans or extensions, yet the homes typically have a level of aesthetic appeal that will leave the owner (and any admirers) satisfied with their investment. If you are looking for a simple but classy home, a barndo is the perfect option for you.

They Are Easier to Construct

When you are converting an existing barn or building a new one from scratch, you can complete your barndominium much faster than you can complete a standard house, all things being equal. This is due to the relative ease of construction, even for elaborate barndo designs. This is thanks to the prefabricated kits that are often used in the construction process.

They Attract Lower Insurance Premiums

Since insurance companies don’t rate the overall value of the average barndo as high as a conventional house, they tend to attract lower insurance premiums for the same level of cover. This gives barndo owners the opportunity to live in a comfortable home that is fully insured at an affordable monthly rate.

They Are Flexible

There is no limit to what you can do with the interior space of your barndominiums. While some people have used theirs as a storage space, you can outfit yours with everything you can find in a home, from cushions to a well-equipped kitchen. You can also choose to use it as the space for your home office and store.

They Make Conserving Energy Easier

The materials used in the construction of a barndo and the general design make it easy to create an energy-efficient home. There are fewer spaces to insulate, and the chances of heat escaping from the attic, for example, are minimal. Also, insulating a barndo will be cheaper than insulating a typical home, especially due to the disparity in sizes.

Why Do You Have to Pay Taxes on Barndominiums?

The taxation culture in the US has been in existence for a while. The federal income tax was enacted in 1913, and soon after, others like the estate tax, gift tax, and Social Security taxes followed. However, property taxes, which your barndo taxes fall under, started over a century earlier in 1796.

The income generated from these taxes pays for the things that make life better for the citizenry, including the development of schools, the building of local and state highways, bank-rolling law enforcement, and so on. Without property (and other taxes), the government won’t have enough resources to run the country.

So, you have to pay taxes on your barndominium to contribute your quota towards maintaining the country’s infrastructure and also towards continued development. You can’t avoid it. However, the one thing you can do is to make sure you are not paying more tax than you should on the property by understanding how barndo tax laws work.

How Does Barndominium Tax Work?

Barndominium taxes work differently from place to place. Even in the same state, the exact percentages paid by two barndo owners can vary. This is because some assessors take the dimensions of the land the property stands on into account when calculating what is taxable, while others only consider the living space, leaving out parts of the property like the shop or barn.

This means that for owners of large-sized barndos, the tax process can get complicated and expensive if the assessor decides to incorporate the value of a large shop, store, etc. housed under the same roof. This is where many barndo owners begin to rethink the decision to own one.

In some cases, the assessors won’t take the time to come and have a look at the property. They’ll simply look for a comparable property in the area, using it as a basis for the tax assessment on your property.

You should expect such an assessment if your barndominium is in the countryside. The tax office will look at the property’s measurements and tax it based on how a similar house in the town would be taxed.

However, you can contest such an assessment by showing the assessors a detailed cost of the project and why it is not comparable to conventional houses. In some cases, you will get a tax evaluation that is a lot more favorable, saving you from potentially losing thousands. This is not a given, but something you should try anyway.

How Do Barndo Tax Appraisers Arrive at Their Valuation?

In most counties where appraisers take the time to come down to your Barndominium for evaluation, they pay attention to the floor measurement you live in, or basically anywhere your heating and cooling systems can reach.

However, as you’ve seen above, some of them can still lump everything on the land together, which means the Barndominium shell, and everything inside it. This means that you can still get a hefty tax bill even if you are only living in half the barndo. Fortunately, it is possible to seek relief legally in this situation.

When Should You Appeal Your Barndo Tax Evaluation?

You should appeal your tax assessment on your barndo if you get a bill that is clearly over the actual worth of the property or, at the very least, the cost of building it from the ground up in the first place.

You should also consider an appeal if, as mentioned above, the entire development on the land has been taken into account instead of just your living area. If you feel the need to go ahead and fight the assessment, here’s what you should do:

  • Take the time to read and understand the assessment letter when it comes.
  • Make up your mind on whether pursuing an appeal makes sense when comparing the stress and potential savings.
  • Go over all bits of relevant data you can find that can help your appeal, including comparable valuations from similar-sized barndominiums.
  • Go ahead and launch your appeal.

Your appeal could be the difference between losing and saving thousands of dollars. However, you need to be prepared for the possibility of a drawn-out case. It is not uncommon to find the process going on for weeks or months, especially if you are dealing with the tax office of a government that is running on a tight budget and looking for ways to raise cash.

This is especially true in counties where the tax base is smaller, but that is not enough reason for you to pay more tax than is necessary.

Challenging Your Barndominium Property Tax: Important Tips

After you’ve decided to challenge the tax assessment on your barndo, here are some tips you should work with.

Ask for the Tax Card on the Property

As a property owner, you can walk into the local county office and ask to see your property tax card from the local assessor’s office. The card contains all the government’s data on your property at the moment, so you should take the time to study it.

They’ll allow you to make a copy, so there’s no need to rush through the process. Some of the card details include the type of fixtures in the barndo, the size of the land space it sits on, the measurements of the rooms, and other such details. You’ll also find information about improvements and any special constructions you may have inside or around the property.

Why reviewing the card, pay attention to find any mistakes or inconsistencies. The tax-assessor will correct or request a fresh round of evaluation for deeper issues. The government is obligated to respond if you point out a mistake, so don’t hesitate if you find any.

Reading the tax card as a barndominium owner is also an opportunity to see how the empty land was valued in the past, providing you with a foundation to work with when discussing how your new barndominium has changed the value of the land.

Rethink Any Additions or Embellishments to the Structure

You may want to continue making changes to improve the look and feel of your property, while you wait for the outcome of your challenging the tax bill. This isn’t a good idea as virtually any structural change you make to the property can add to your tax bill.

New windows, a pool in the yard, a patio construction, etc. and even interior changes like new countertops or the latest Smart TV can all add to the presumed value of the barndo.

This is not to say that you should live in an unattractive property for the sake of getting tax relief, but the reality is that it could be the difference between paying a similar tax rate with other barndo owners in the area and paying a lot higher.

Although tax assessors have a general guide they work with, they are still allowed a fair amount of subjective judgment. In many cases, the more attractive one between two barndos of the same size will get a higher assessed value.

Find Out What Others Around You Are Paying

Do you live in an area where other people have built barndos? You are also allowed to request for the evaluation statistics from your area, so you can compare the evaluation you received with what other owners of similar-sized barndos got. Again, you are allowed to raise any discrepancies, which can lead to a lower tax bill for you.

Show the Assessor Around

When you secure a re-evaluation, don’t allow the assessor to wander in and out of your barndo alone. They’ll most likely fixate on the good things about the barndo, especially your shiny new fittings. Show them around the property, and make sure they see both sides of the coin. 

Even when there are no obvious “downsides,” pointing out the heat in the barndo, a crack in the ceiling, downplaying the beauty of your furniture, or showing off an area that hasn’t been furnished yet could help ensure the assessor maintains a balanced view of your barndo.

How to Write an Appeal Letter to Fight the Barndo Tax Assessment

If your attempt to get the tax assessors to see reasons with you on the valuation of your barndo doesn’t yield a positive outcome, you can formally lodge an appeal. This is the default step to take when the county officials don’t agree that they’ve made any mistakes. You don’t have to pay for a lawyer right away.

Finding a template to use in your application is as simple as entering a quick search on Google, but you can use this option or this other option. Once you find a sample letter that is good enough, change the information where necessary to make it yours. Seal the letter and drop it off at the local taxing authority personally.

When the Barndominium Tax Appeal Letter Doesn’t Work

In many cases, the tax assessment appeal letter is enough to get you a favorable outcome on the tax estimate. If that doesn’t work, there are a few more things you can do.

Check for Exemptions You Qualify For

Your local tax authority can provide all the information on the exemptions available. Go over them and see if any of them is applicable to you.

Most states will offer tax exemption for religious and government organizations, but you may get an exemption if you are a senior, veteran, or have certain abilities. You may also qualify for an exemption if you can prove that your barndominium is important for your agriculture business.

Check with your taxing authority if you qualify for an exemption.

Become an Apiculturist

An apiculturist or a bee farmer raises bees for their honey and also helps in the fight to stem the loss of the earth’s bee population. This is relevant to your tax situation because most states offer tax incentives to beekeepers that meet certain requirements.

In Texas, for example, your barndominium can qualify for tax breaks if it’s on at least five acres, and you can afford to start a bee farm with at least six colonies. Here’s a beginner’s guide you can start with on beekeeping. With a little bit of research, you can end up building a sustainable business.

Shouldn’t You Just Lie About Your Use of the Barndominium?

Many people know that a barndo being used for agricultural purposes qualifies for tax breaks, so it is not a surprise that many online platforms are filled with people telling others to lie and claim agricultural use, such as saying that it is an agricultural implement barn—with a display of borrowed farming tools.

Of course, this can work in some cases, but it is not a legal way of seeking tax relief. No matter how long it takes for the con to end, the tax authorities will take you to the cleaners and get every bit of back taxes you may owe when the time comes.

You should only explore legitimate legal options for lowering your barndo tax if you feel like you’ve gotten an unfair valuation from the assessors.

Last Words

You have to pay taxes on your barndominium when it’s constructed. The valuation can take into account only the living areas or the entire property, depending on your county.

You can find out from the local county office the general valuation for barndominiums like yours to determine if you are paying a higher rate than normal. If this is the case, you can explore any of the legal options to get a revision.

You can also talk to other barndo owners in your area or hang out in online groups to get estimates. If you haven’t built your barndominium yet, you can run the numbers to see if it’s a good idea to proceed with your construction.