How Are Barndominiums Taxed? A Comprehensive Guide

Barndominiums, a unique blend of a barn and a condominium, have been gaining popularity in recent years as a versatile and cost-effective housing option. These hybrid structures combine the durability and rustic appeal of a barn with the comfort and functionality of a modern home. While the idea of living in a barndominium is appealing to many, it also raises questions about how these structures are taxed. If you're considering building or purchasing a barndominium, understanding the tax implications is essential to ensuring you stay compliant and avoid any unexpected financial surprises.

In this blog post, we'll explore how barndominiums are taxed, including the property taxes, sales taxes, and other considerations that may affect owners.

What is a Barndominium?

Before diving into the specifics of barndominium taxes, let's quickly define what a barndominium is. A barndominium is a building that typically has a steel or metal frame and siding, designed to function as both a living space (like a condo or house) and a barn (for farming, storage, or workshops). While barndominiums can be customized to suit various needs and preferences, they generally combine residential and agricultural uses into a single structure.

Because of their unique nature, barndominiums may be taxed differently than conventional homes or barns, depending on how the property is classified and its intended use.

1. Property Taxes on Barndominiums

Property taxes are one of the most significant tax considerations for barndominium owners. The tax treatment of a barndominium will largely depend on the property's classification as either residential or agricultural. Here's a breakdown of how property taxes may apply to barndominiums:

Residential Property Tax

If your barndominium is primarily used as a home, it will typically be classified as residential property for tax purposes. This means it will be subject to property taxes at the residential rate, which is usually based on the market value of the property. In most states, residential property is taxed at a higher rate than agricultural or industrial property.

Key factors influencing residential property tax rates include:

  • Market Value: The appraised value of your barndominium will determine how much property tax you owe. This value is usually assessed by a local tax assessor.

  • Local Tax Rates: Property tax rates vary by state and county, so the tax rate for your barndominium may differ depending on where it's located.

Agricultural Property Tax

If your barndominium has significant agricultural use (for example, if it’s used as a barn or a farm workshop), it may qualify for agricultural property tax treatment, which typically comes with lower tax rates.

To qualify for agricultural tax treatment, you generally need to prove that the property is being actively used for farming or ranching purposes. Many states offer agricultural tax exemptions or reduced tax rates for properties that meet certain criteria, such as:

  • Producing a specific amount of income from farming.

  • Having a portion of the property devoted to farming or livestock operations.

If your barndominium meets the qualifications for agricultural property tax treatment, you could save significantly on your property taxes.

2. Sales Tax Considerations

In addition to property taxes, barndominium owners should also be aware of potential sales taxes that may apply during construction or renovation. Sales tax is typically assessed on materials and services used to build or renovate a barndominium, though the exact rates and rules can vary depending on the state and local jurisdiction.

Sales Tax on Construction Materials

When building a barndominium, the materials used in construction (such as steel, concrete, insulation, and electrical supplies) may be subject to sales tax. In many states, sales tax applies to the purchase of materials, while some states offer exemptions for construction materials used in certain types of projects, like agricultural buildings. However, barndominiums that are used primarily for residential purposes will likely be subject to the standard sales tax on materials.

Sales Tax on Labor

In some states, labor costs associated with construction may also be subject to sales tax, while in other states, labor is not taxed. You will need to check the specific tax rules for your state to understand how labor charges for building or remodeling your barndominium will be treated.

3. Tax Deductions and Benefits for Barndominiums

Depending on how your barndominium is used, you may qualify for certain tax deductions or benefits. These can help offset some of the costs of building and maintaining your barndominium.

Mortgage Interest Deduction

If your barndominium is used as your primary residence or as a second home, you may qualify for the mortgage interest deduction, which allows you to deduct the interest you pay on your mortgage. This deduction can significantly reduce your taxable income, making homeownership more affordable.

Business Use of Barndominium

If you use part of your barndominium for business purposes (e.g., as a workshop or storage space for a business), you may be able to deduct certain business expenses. The IRS allows property owners to deduct expenses related to the business portion of their home, such as:

  • Utilities

  • Repairs and maintenance

  • Insurance premiums

  • Property taxes

The business use must be legitimate and meet specific criteria set by the IRS, so it’s essential to keep detailed records of how the space is used and how expenses are allocated between residential and business uses.

4. Zoning and Building Code Considerations

While not directly related to taxes, zoning laws and building codes can impact how your barndominium is taxed and how it is classified for property tax purposes. Some counties or municipalities may have specific zoning regulations that determine whether a barndominium can be used as a residential property, an agricultural building, or something in between.

If your barndominium is not properly classified or zoned, it could lead to higher property taxes or fines. Be sure to check with local zoning and building authorities to ensure that your barndominium complies with local rules before construction begins.


Barndominiums are an attractive option for many homeowners due to their versatility, affordability, and rustic charm. However, understanding how these structures are taxed is essential to making informed decisions about building or purchasing a barndominium.

Whether your barndominium is primarily residential or used for agricultural purposes, it is important to understand the tax implications, including property taxes, sales tax on construction materials, and potential tax deductions. By working with a tax professional or real estate expert, you can ensure that your barndominium is properly classified and take advantage of any available tax benefits.

Before you begin your barndominium project, it's wise to consult with an accountant or tax advisor who can guide you through the specific tax rules in your area and help you make the most of your investment.

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