How are barndominiums taxed

barndominiums, or metal buildings retrofitted for living, have become a popular option for homebuyers looking for something unique, custom and often cost-effective. But these metal dwelling houses are taxable in much the same way as traditional homes. Here's an overview of how barndominiums are taxed, from property taxes to sales taxes.

Property Taxes

Property taxes on barndominiums are based on the assessed value of the building and land it sits on. Depending on local tax laws, barndominium owners may be eligible for a homestead exemption, which lowers the amount of property taxes they owe each year.

Sales Taxes

When purchasing materials and supplies to build a barndominium, buyers may be liable to pay state and local sales and use taxes on items like lumber, light fixtures, and paint. In most cases, no sales tax is charged when buying the actual metal building itself; however, this tax can vary based on state and local regulations.

Mix Use Buildings

Many people choose to build a barndominium that serves as both living space and commercial operations. In cases like these, additional special assessments may be applied for things like business licenses or permits required by the municipality in which it is located. Additionally, if there are business activities taking place inside the barndominium (such as through AirBnB or other short-term rental operations), income earned from those activities can be subject to additional taxes like income or lodging tax.

Long-Term Capital Gains

If a barndominium owner decides to sell their home at some point down the line, they'll also need to pay capital gains taxes on any profit made when selling it. Depending on how long they owned it and what other types of expenses they incurred when building it (like material costs) will factor into how much capital gains tax they owe.