Rendering Unto Caesar: How Are Barndominiums Taxed?

A growing sore spot for barndominium owners is how their barndos are valued for tax purposes. So the core question is twofold.

How are barndominiums taxed? Many assessors count the unheated square footage of a barndominium shop toward the total taxable. Other assessors only count the heated space. It’s a difference that can add up to thousand of dollars.

Is it fair? Many say it is not, depending as it does on your state and county. Going mainly by square feet, it can get complicated — and expensive — for owners of barndominiums, especially those with big shop areas.

Because assessors often like to figure in the value of an attached large shop under the same roof, this drives the taxes up, and drives barndo owners crazy.

More on that in a minute.

A brief history of taxation

Not that most people need a reminder of why we need to “render unto Caesar what is Caesar’s,” as the Bible says famously, but this is where American dissatisfaction with taxes officially began. Boston Harbor, December 16, 1773.

What started as a bunch of rowdy nationalists upset over unfair taxation of their tea has resulted in the creation and endurance of our great country.

But we still don’t like to be taxed unfairly.

The need for taxes

Here in the U.S., governments at all levels derive money that comes in from real estate taxes to pay for services we all undeniably need and use: law enforcement, work on county and state roads, and the establishment in most communities of a good local school district, to name just a few services.

If property taxes didn’t exist, local and county governments would be hard-pressed to come up with enough revenue to make these things happen. We simply take them for granted.

Until the tax assessor shows up.

Here’s how it works

Actually, the assessor doesn’t even have to show up physically. All he (or she) has to do is find a comparable property and use that as a basis for assessing the tax value of yours.

Unfair? Yes. And apparently not uncommon for owners of barndominiums.

“I built a barndominium for the in-laws on a section of our property in the country,” says one individual about his barndo experience with local tax authorities.

“Our tax office looked at the square footage of the barndominium and taxed it based on what a comparable house in town would be taxed at.”

The man argued that it wasn’t a fair assessment since the tract of land that the barndominium was located on couldn’t be separated from the whole. He told the assessor how much he had paid to have it built and they settled on a market value considerably less than first given.

He was lucky, in a way. That government official was relatively approachable about the issue. Many are not, forced as they are to continually throw money into the hungry maw of their often inefficient county government infrastructure.

Two similar stories

Another builder says that in cases where the barndo has a large “barn” attached to it — many would call this area a shop, but in any case, not part of the actual living quarters — assessors take that into consideration and only tax the “livable” square feet. Particularly if the whole structure sits on a large acreage.

But if, say, you build a 5000 sq ft barndo — 2500 sq ft of which is a shop housing your motor home or two ATVs and a pontoon boat — and your footprint takes up much of your 1.5 acres, then you will likely see no mercy from the taxing officials.

“I had a friend who had a smaller barndominium — like 2500 under roof — and he was taxed as a normal house,” says a third person. “But someone else I know built just a metal shop on his property. And the county tax office told him that if he added windows to it, it would be taxed at a higher rate, even though the use would be the same.”

What tax appraisers look for

In many counties, it just boils down to how many square feet you heat and cool. Those are the easy entities to get along with.

It’s the counties that want to fold absolutely everything under one roof into what they consider to be “developed land” that may give you tax sticker shock when you get your bill. And that will, in turn, drive you to consider legal alternatives for relief.

Reasons to appeal property tax assessment

The main reason for appeal, of course, is that your bill may bear no relation to what your barndo is actually worth — or at least what you built it for in terms of dollars spent.

Another reason would be, as in the examples above, your barndo has been taxed in toto, counting your 5000 sq ft riding arena at the same rate as your 900 sq ft living quarters. (Believe it or not, this very scenario has occurred a few times with huge barndo structures).

In any case, the need may arise for you to formally protest the assessment. Here are the steps toward that action, according to an article on HouseLogic.com:

Follow these five steps to challenge your assessment:

  1. Read your assessment letter as soon as it arrives.
  2. Decide if an appeal is worth your time.
  3. Check the data.
  4. Get comparable valuations.
  5. Present your case

However, don’t expect a quick and easy resolution. Sometimes the process can go on for months if a particularly cash-strapped government isn’t eager to settle for less.

To be totally fair, they have financial obligations, too — especially in smaller counties with a smaller tax base.

But that’s no reason for you to pay more than you should. Do the 21st century version of dumping tea into the harbor. Write a letter. Here’s how.

How to challenge property tax assessment

In an excellent article in the respected online money management forum Investopedia.com, advisers say you should take these steps:

Request your property tax card and study it.

“Few homeowners realize they can go down to the town hall (or county seat) and request to view (or receive a copy of) their property tax cards from the local assessor’s office. The tax card provides the homeowner with information the government has gathered about their property over time.

“The card includes information about the size of the lot, the precise dimensions of the rooms, and the number and type of fixtures located within the home. Other information may include a section on special features or notations about any improvements that have been made.

“As you review this card, note any discrepancies and then raise these issues with the tax assessor. The assessor will either make the correction and/or conduct a re-evaluation. This tip sounds laughably simple, but mistakes are common. If you can find them, the government has an obligation to correct them.”

NOTE; in the case of new barndominium owners, reading the card will likely just provide a chance to see how they’ve valued the undeveloped land historically — and provide a baseline for you to offer helpful advice to them about the relative impact of your build.

But if you’re currently living in a traditional home, this is a good option to possibly lower the taxes on your there.

Other advice from Investopedia:

Limit curb appeal. In other words, if your barndo is due for exterior embellishment – stone columns, or a tricked-out patio with pool and hot tub — make these improvements AFTER the initial assessment is made. You’ll likely get a rate increase next time they revalue, but no sense in paying more before your time.

Research Thy Neighbors. Knowing that your rate card is available at the county tax office is valuable. Knowing that the rate cards of all your neighbors is also available for public scrutiny is invaluable. See how they’ve been treated in the past. Particularly if they, like you, built a barndo. You can often find discrepancies that could lower your taxes.

Walk your barndominium with the Assessor. While this may seem like a scary and even unwise step, you must understand that if you don’t, it could go down hard on you. They might go away muttering about what you must be hiding and then tax you at the highest possible rate. So be friendly, but be wary. Point out the areas you economized on. Downplay your countertops as faux marble — not real. That sort of thing.

Property tax assessment appeal letter

If all else fails, and you’re forced into filing a formal protest, don’t despair, and don’t run right out and get a lawyer. This is the next step to take: file an appeal letter.

And here is where Google really is your friend. Type this string of words into Google’s search bar: “property tax assessment appeal letter sample for (insert the name of your state).”

Trust us when we say that somewhere, someone has already walked this path and done the heavy lifting — and probably has left detailed instructions on how others can do so as well.

Here are a couple of example letters

Crowdreason.com offers one here. and needhelppayingbills.com offers another here. Just substitute particular information referencing your particular situation and hand deliver it to the taxing authority.

Nine times out of ten, this will be all you need to do to resolve the issue.

Last, but far from least

Here’s a novel solution that might help your tax situation.

If you have acquired as many as five acres on which to build — or have already built — your barndominium, take an unusual extra step that might offset a pricey assessment on your barn home.

The state of Texas, among others, has set as a minimum five acres (and a maximum of 20 acres) to qualify beekeeping as a valid agricultural use of your property, thus granting you some offsetting tax relief.

Beekeeping? Where would I find out about that?

Once again, Google to the rescue. A quick look at guidelines posted at this governmental website states the following:

“The State of Texas has set a minimum of 5 acres and a maximum of 20 acres to qualify beekeeping as an agricultural use. Our degree of intensity standard is set at a minimum of six colonies and 5 acres.”

In addition, if you want to become a beekeeper — to qualify for an exemption or otherwise — take a look at this county-by-county assimilation of rules by Texas county. Click here for a national guide.

So there you go. Don’t say you came to BarndominiumLife.com today and didn’t get your money’s worth.

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