For many people beginning their custom log home project, taxes are not something they typically include in their initial list of things to consider. While taxes are something that you do not need to focus on right from the get-go, it is an important part of your budget and deserves contemplation. This week we spoke with our Vice President of Finance, Kym Hurst, on understanding tax and how it 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. It is important to have an idea for what your taxed amount will be when you first begin calculating what you will be able to spend on your entire project. Speaking with your financial advisor 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 or new home tax, and an area tax that 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 contrast on a larger scale like Canada and the U.S. or relatively smaller scales 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.