Property Tax Post: Your Doomsday Haven May Add to Your Tax Bill


 

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On July 9, New York Magazine published an article putting readers on notice that “doomsday” is virtually around the corner. In a nutshell, the article suggests that continued manmade global warming may lead to possible extinction caused global warming-induced heat deaths, famine, and civil war, among other things. It sounds terrifying. But some folks are preparing for doomsday by investing in bunkers that may put them in a position to “carry on the torch for humanity,” as Money describes it. This type of investment can see different property tax treatment based on the state, as some states impose taxes on bunkers and others exempt these shelters.

In New York, for example, real property constructed, altered, or improved to include a fallout shelter facility that complies with the New York State Defense Emergency Act may qualify for exemption if the property’s value is increased by the addition of the shelter. A qualifying applicant may claim an exemption worth up to $100 multiplied by the number of occupants that the shelter is designed to accommodate.[1] New York has also gone one step further, providing an exemption for off-street parking facilities that provide underground shelter in compliance with the defense emergency act. Off-Street parking facilities that qualify may claim the exemption for a period of 25 years.[2]

New Jersey also has a similar exemption for property outfitted as a “blast or radiation fallout shelter” under N.J. Rev. Stat. § 54:4-3.48. The law states that if a blast or fallout shelter is built on real property occupied by two families or fewer, and having the shelter increases the property’s value, the property owner may be entitled to an exemption worth up to $1,000 in assessed value.

Doomsday preppers may not be as lucky if they are planning to seek refuge in South Dakota, but some may fare better than others depending on where they choose to situate their doomsday bunker. For example, Vivos, a company that provides underground shelters which it claims will “survive virtually any catastrophe,” offers to lease bunkers for 99 years for an upfront payment of $25,000, plus an additional yearly $1,000 payment. Lessees are also required to pay property taxes on their bunkers. Robert K. Vicino, the founder and CEO of the company, told Bloomberg BNA that each lessee’s proportionate share of the property taxes are included in a $99 monthly fee. Vicino also explained that the bunkers offered for lease on Vivos’ South Dakota property enjoy a low tax rate because the land is considered agricultural land for tax purposes and it is not taxed at the same rate as residential property.[3] 

A closer look at South Dakota’s property tax code reveals that as a general rule, property tax is imposed on owners of real property as well as joint tenancies, life estates, and other possessory interests shared by partners, interest owners in a limited liability company, persons owning corporate interests, vendees of a deed contract, or trust beneficiaries. Although presumably a bunker constructed on exempt property may not be subject to tax, unlike New York and New Jersey, there are no specifically enumerated exemptions for bunkers or fallout shelters constructed on otherwise taxable real property in South Dakota. This means if you build a bunker in your back yard, you may be paying higher property taxes.

That being said, property taxes are unlikely to deter doomsdayers from investing in shelters that will prevent them from potentially being roasted to death by the sun, as New York Magazine describes it, in the wake of a global warming-induced catastrophe. For those that do benefit from a property tax savings, the next logical step might be to use those savings to purchase goods and supplies to stock the shelter. For information on whether these items might be subject to sales and use tax, check out “Sales Tax Slice: It’s the End of the World As We Know It … And I Want To Know What This Means For Sales Tax,” by Bloomberg BNA’s Katie Devinney.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Does your state offer a property tax exemption for doomsday bunkers?

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* This post has been updated to include Robert Vicino’s explanation that the $99 monthly payment for Vivos’ South Dakota doomsday bunkers includes each lessee’s proportionate share of property tax and to reflect his explanation that the land on which the bunkers are located is classified as agricultural property for tax purposes. 


[1] N.Y. Real Prop. Tax Law §479.

[2] N.Y. Real Prop. Tax Law §478.

[3] According to Vicino, lessees cannot utilize the bunkers as residences, therefore, taxing officials cannot tax the property as residential real property.