Do You Have To Pay Property Taxes On a Shed?

You’ll agree with me when I say, taxes are confusing for most people. Are you thinking of building or erecting a shed on your property? Are you not sure what shed may cost you? Do You Have To Pay Property Taxes On a Shed?

The short answer is, if your shed has a permanent foundation (like poured foundation) or connected to water or electric services, most probably it will be assessed for real estate tax purposes.

However, your answer will depend on a few things that we’ll cover in this article. Let’s take a look:

Do Sheds Increase Property Taxes?

To be honest, a lot of it depends on the individual states and their tax laws. In some states, a concrete floor can be a key factor in judging the taxation of your new shed.

An outdoor structure can sometimes only be taxable once attached to the property. And by “attached,” we mean in a permanently.

This can include a permanent foundation or electric, water, sewage, and other hookups. These mark it as a “livable space” and allow for taxation in some states.

So, the question of, “Are storage sheds taxable,” boils down to your region’s laws. Here’s an example where 10′ by 20′ shed of one of the residents of Stroud Township in Pennsylvania was called subject to taxation. The Monroe county assessment office defined it as a building, not a portable building since it has a garage door and wooden floor.

The good news is that, in most cases, an outdoor structure you install is going to add to your home value.

How Much Will A Shed Raise My Taxes?

Again, this comes down to individual state and county decisions. It also makes quite a difference when considering the size of the structure you’re going to build.

In the example above, the homeowner’s property assessment was raised by more than $2000 (which also increased homeowner’s county, school and township taxes).

The best thing you can do if you need accurate numbers is to call your local tax assessor. They’ll guide you in regards to how each of the varying sizes and amenities may affect your property tax.

As mentioned before, the degree of a structure’s mobility can also affect taxation. It’s possible that the addition of a shed, in your case, will not sway your property tax at all.

How Important Are Building Permits?

Building permits are critical to protecting yourself and your project from city retribution. If you attempt to build a structure without the proper permits, the city will assess a fine.

As a matter of fact, some cities may even demand that you tear down your project. Building and zoning permits are in place not only for tax purposes but also for the safety of others.

Without building permits, a home could undergo shoddy work. This places surrounding buildings, as well as said building, in danger of fire or other damage.

There are instances where building permits are not required, so be sure to check with your city first. They can also tell you whether your planned placement of the project is lawful.

Cities vary in their laws when it comes to how far away from property lines that you must build your shed.

But if you build or place the shed too close to neighboring property lines, the city will force you to tear it down. This can be not only time-consuming but also expensive.

Better safe than sorry.

Beware: Check your local building permits before deciding whether to build a shed. In some areas, the hike in property value is not a fair return on investment when compared with the property tax.

If The City Increases Your Property Tax, Try the State

If you feel that your shed should not raise your property tax feel free to “get a second opinion” if you feel that your shed should not raise your property tax.

Going back to our example, it didn’t stop with the city. The homeowner appealed to the state after the city moved to increase their property tax. The storage building in question was mobile and not affixed to the property. Since it also did not have any utility hookups, the state overturned the city’s decision.

What I’m trying to say is that the first verdict isn’t always the final one. If you have a mobile storage shed, then it may be worth it to appeal the city’s decision to the state.

ROI: Property Tax versus Home Value

Realtors say that a storage shed in good condition may increase your home’s value. It needs to have a clear, defined purpose and be well maintained to do this.

A rundown barn or building that potential buyers may see as tacky may decrease your home’s value. As with anything else relating to your home, you must keep up maintenance.

Another possible turn-off for buyers is the potential for difficult maintenance. Make sure you choose materials that are durable and attained with relative ease.

Last, you want to ensure that you take out a permit, if applicable, for the shed on your property. Otherwise, your home value will decrease in the eyes of potential buyers.

This is because, when someone buys a house, they inherit all responsibility. A home that is missing permits for work performed will be a headache.

Nobody wants to start out a huge life milestone, like buying a house, with legal issues, right? Of course not. So, make sure to buy the required permits and go through proper channels.

As long as you follow these tips, your storage shed should yield a decent return on investment. For other ROI tips, check out this YouTube video!

What About UK, Canada, & Australia?

As far as my research goes, it appears as if these three countries have similar laws to those of the United States. The only difference I can determine is their prominent “tax relief” incentives.

They seem to offer these opportunities to small businesses to help them grow. They allow these businesses to use mobile structures, such as sheds, without taxation.

This is only permitted when the entrepreneurs use the structures for business purposes.

Conclusion

Property taxes can be confusing, even for something as small as new storage shed. But now you’re a little more prepared.

You know about mobile storage sheds that may help keep your property taxes low. You know about the crucial nature of building permits.

And, you know how to choose a storage shed that may increase your home value.

A few things to keep in mind before you go:

  •  DO contact your city before placing or building a shed.
  •  DO secure building and zoning permits for your new shed.
  •  DON’T build or place your structure too close to property lines.
  •  Reminder: If the city moves to increase taxes on a mobile storage building, appeal to the state.

If you have any questions about what we covered today, please reach out to us in the comments.

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