Are Taxes Cheaper on Barndominiums?

If you dream of a spacious home that’s more affordable than traditional homes, you’ve probably heard of barndominiums. The customizable structure resembles a large barn in the countryside, but with the comforts of a city home. To help you decide whether it’s worth having your own barndominium, in this article we’ll look at how you can save money, not only on construction, but also on taxes.

How Property Taxes Work for Barndominiums

Property taxes on barndominiums are calculated in the same manner as traditional real estate. Their basis value is calculated based on the local real estate market and the local tax rate. For example, if a barndominium in Wyoming is valued at $400,000 and the tax rate is 2.0%, the annual tax would be $8,000. It is important to note that tax rates and property assessments can vary significantly from state to state. For accurate information on barndominium taxation in a specific location, consult your local property assessment office or a property tax professional.

According to Bankrate, property taxes are calculated as a percentage of your home’s assessed value, which varies by location. So, if your barndominium is appraised at a lower value, you could end up paying less in taxes compared to a similarly sized traditional home.



Potential Barndominium Tax Advantages

In addition to space and amenities, barndominiums can provide owners with several tax advantages. These advantages vary based on your region and local laws. Here are some of the potential tax advantages of barndominiums:

1. Agricultural Exemptions: Barndominiums built on land set aside for agricultural purposes may be eligible for agricultural exemptions in some places. When compared to residential properties, this can result in reduced property tax rates.

2. Cost allocation: The practical spaces of barndominiums are often combined with storage and workshop space. This allows for the allocation of personal and business costs. As a result, you can reduce your taxable income by deducting some of your construction costs and reporting them to your business.

3. Energy efficiency incentives: Many barndominiums are built with more energy-efficient features, such as high-performance insulation, solar panels or geothermal heating. And by utilizing energy-saving features, you may qualify for a variety of tax incentives, credits or rebates for promoting sustainable living.

4. Home Office Deductions:

You can claim deductions for using part of your barndominium as a home office. Although these are not large amounts, you can save money by deducting interest on your mortgage, property taxes, and even maintenance expenses.

5. Depreciation: Just like conventional residences, barndominiums undergo depreciation, which allows you to subtract part of their value and also reduces your total taxable income.

6. Benefits of Rural Properties: The preferred location for barndominiums is often semi-rural or rural areas. Since these areas are far from commercial centers, they have tax benefits, and you can obtain potential exemptions and reduced rates of property taxes.

We must stress that it is important to observe the tax regulations of the specific location where you intend to or already have your barndominium, as they vary greatly depending on the jurisdiction. To better understand the advantages of taxes on barndominiums we recommend consulting a qualified tax professional or local financial advisor.

Is a Barndominium Right for You?

While tax savings are a big advantage, barndominiums offer other financial advantages as well. They can be energy efficient and are often quicker to build than traditional homes. Plus, with companies like iLevel Construction, you don’t have to navigate the process alone. Our experience ensures that your barndominium is built to your exact specifications, and we are transparent throughout our processes.

If you’re dreaming of a unique home, a barndominium could be the perfect solution. Contact us today to share your idea.