For many people beginning their custom log home project, taxes are not something they typically include in their initial list of things to consider. However, taxes are an important expense to budget and deserve contemplation early on in your project. Kym Hurst, PrecisionCraft’s Vice President of Finance, has answered some common questions below regarding taxes and how they will affect your custom home project.
When will you see tax effects?
Your initial encounter will begin in your contract phase with the log home provider. Speaking with your financial adviser can help to give you some clear insight as to what your taxes will be so you are better educated when you see your initial contract and as you proceed further.
Who do I contact during each phase?
Through all phases of your project, you will want to speak with your personal financial advisor or accountant about laws regarding specific taxes as they apply to your home. Your contractor is another resource that should also be able to help in certain aspects of your home building journey.
What parts of your project are taxed?
There are several facets of your project that can and most likely will be taxed. You will have a property tax and a tax on materials. There is also the possibility of a home tax, new home tax or area taxes. These taxes will fluctuate depending on several factors.
How does your specific project affect taxes?
Where you plan to build and how you plan to do it are factors that can greatly affect how and which taxes are applied to your project. If you are building on a waterfront, some water table or flood plains taxes may be applicable, whereas, if you are building in a mountainous region, your project will be more affected by taxes regarding the terrain. Taxes will also vary based on your building country, such as Canada and the U.S., or relatively smaller boundaries, like counties or states.
How you plan to build can also be a factor—will you have a materials package or will you utilize design build services? Will this be an entirely new project or one built in place of a previous home? By speaking with your general contractor about all of these areas, you can stay on top of your particular project’s taxes and help the process run more smoothly and accurately.