Do you Have to Pay Property Taxes on a Shed | Updated Rules (2022)

Do you have to pay property taxes on a shed? Sheds have become very popular recently for their different uses. Nowadays, Homeowners not only use sheds for storage spaces but also for various purposes such as home offices, kid’s play areas, personal nooks and crafting corners etc.

As work from home is becoming more common, people often look for homes with an outdoor office area, for which sheds are the most suitable options. But before adding such a new structure to your house premises, you would wonder if it will increase your house market value.

Modern sheds are becoming increasingly popular as an addition to homes. In addition to extra storage space, sheds nowadays have a variety of uses. While they may not add significant monetary value to a property, they also do not increase property taxes (at least in most cases).

So how would the property taxes apply if you stayed in it? This article will provide you with all the necessary information about the cost of sheds, taxes on sheds, laws, etc.

What are Property Taxes?

Do you Have to Pay Property Taxes on a Shed

Most of the time, homeowners have no idea how their property taxes are calculated, and upon asking, they will just tell you that they pay too much. But property taxes are something you can never be free from, even after paying your mortgage.

These are real estate taxes, meaning they only apply to a property that qualifies as a real estate/livable space and is considered ad valorem (assessed according to the value of a property).

Moveable properties are generally classified as personal property, and real estate taxes do not apply to them. These are used to pay for municipal services and local funds and projects.

Are Sheds Considered Taxable Property?

Custom-built sheds are popping up here and there across the country. They are used for miscellaneous activities, and people find them pleasantly viable with rent-to-own shed options. Instead of owning a storage space a mile away, people prefer to have such a space in their homes with easy access.

But there is always a concern about what would be the effect of the shed on home value and what would be the property tax on a shed. The simple answer would be: If your shed is attached to your house or has a permanent foundation, e.g., concrete floor and has access to water, electric or sewage services, then it would be classified as a living space and thus would be taxed accordingly. But it still depends upon your region’s zoning and tax laws.

Before undergoing a big shed project in your yard, you should check local zoning and tax laws, especially if you intend to make the shed a small guest home or granny pod. This would classify the shed as livable space and increase your property tax.

If people use a pre-fabricated or finished shed or sheds made on the skids, they become portable buildings, are considered personal property most of the time, and do not contribute to property taxes. But it’s better to be sorry, and it is always suggested to consult the state and region’s local zoning and tax laws and get a permit before installing one in your backyard.      

How much are the taxes on a shed?

Property taxes are not absolute or definite and are calculated by the local government where the property is located. Thus, they change with region and state. Also, zoning laws are different in every region, so someone can’t provide you with general or accurate figures. So, what do you have to do?

The best option is to call your local tax assessor. They can guide you in regards to how the size and mobility of your shed will affect your property tax. In some cases, if your local laws comply with the “mobility” aspect, adding a shed to your home might not affect your property tax. They can also provide a ballpark estimate of how the shed will increase your property tax. Remember that if you think your shed does not classify as real estate and should not be taxed, you can get a second opinion or file an appeal against the city’s decision to the state. 

But as has been mentioned above, despite not adding considerable financial value to your home, they don’t raise property taxes (at least in most cases).

How Much Does It Cost To Maintain A Shed On Your Property?

Do you Have to Pay Property Taxes on a Shed

Before building a shed, people ponder upon the question of whether the shed will be a good investment or not. Will it contribute to the home value or property taxes? The answer is a shed does not add to your home value the way you want or think. Many appraisers have said that a shed doesn’t directly raise your market value but can affect the home’s overall value. 

Let’s start with the cost of building a shed by a homeowner. According to lawn starters, the average cost to build a shed is $3,634, with homeowners paying between $1,767 to $9,567. There are many options when installing a shed project, so the cost can vary. One of the most affordable options is to install completed or pre-fabricated sheds in your backyard. 

The cost of maintaining a shed varies on the type of material used in building the shed. You should always use high-quality material as the shed is always exposed to changing weather conditions. Also, the cost depends upon the shed’s size and construction.

Frequently Asked Questions

Are portable storage containers taxable property? 

Portable storage containers do not classify as a real estate since they are mobile. As they are mobile and can be moved from one place to another, they are referred to as personal property and do not incur an additional property tax.

Do you have to pay property taxes on a pool or hot tub? 

In-ground swimming pool or hot tub contributes about 5-30% of property value. The tax assessor then uses this valuation to impose a property tax increase of the same margin. The above-ground swimming pools are moveable and thus have no property tax on them.

Do you have to pay taxes on your driveway or garage? 

A garage can increase the property value up to 5%, and you will need a permit to build one. This increase in home value will increase your property tax, as property taxes are ad valorem. 

Is your car taxable as real estate property?

No, real estate taxes are applicable on immovable property like homes, whereas a car is a moveable property and is classified as personal property. So, real estate taxes do not apply to your car.

Are fences and walls taxable property?

Anything that increases the market value of your property increases your taxes. Since a fence around your home defines the property boundaries and gives privacy, it increases your property value, and thus property taxes are raised.

Are greenhouses taxable real estate?

Temporary greenhouses can be evicted from real estate property taxes, but depending upon the size and the layout of the structure or the way the structure is erected, many greenhouses are subjected to the property tax.

Will A Shed Lower Your Property Value?

A shed doesn’t necessarily increase your property value by leaps and bounds but also doesn’t lower your property value. Most of the time, a shed attracts more people to the house and increases the overall property value.

Also, getting a permit and maintaining your shed in a good position can be a good step towards better marketing your place. According to experts, a shed might add approximately $20,000 to the property’s value.

Conclusion

A shed is a good home investment owing to its multiple uses nowadays. A shed doesn’t bring any definitive change to the home value and property taxes. Before installing a shed, you should contact your local zoning laws and local tax assessor.

Get a permit, and then install your shed. Most states follow the law that unless a shed is classified as livable space or is permanently attached to the home, it is personal property and is not to be taxed. 

Expert Opinion

From an expert point of view, we suggest you always contact your local municipal and local tax departments before undertaking any shed project in your yard. Sheds are a good personal investment for one’s home; people are taking great advantage of them by converting them into their office spaces, etc. Portable sheds have a great advantage as you don’t have to pay the tax and contribute to the overall home value.

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