Does Adding a Shed Increase Property Taxes?

Whether adding a shed increases property taxes depends on if the structure is considered a temporary addition or a permanent improvement. The shed’s physical characteristics and local regulations determine its impact on your property’s assessed value. If a shed is classified as a permanent structure, it can trigger a tax increase.

How Sheds Impact Property Assessment

Property taxes are calculated by multiplying the assessed value of your property by the local tax rate. The “assessed value” is the worth assigned to your property by the local government for taxation purposes. Any time you make a significant change to your property, you can alter this assessed value.

When a homeowner adds a permanent improvement, the assessed value of the property is likely to rise. A higher assessed value leads to a larger property tax bill. This applies to any major home improvement, as any addition integrated with the property as a lasting feature can increase its value.

Key Factors That Determine Taxability

The distinction between a temporary piece of personal property and a permanent, taxable structure is based on several physical attributes. Assessors analyze these factors to determine if a shed adds lasting value to the real estate.

• Foundation: A shed on skids, cinder blocks, or a gravel pad is often considered portable and less likely to be taxed. Conversely, a shed on a permanent concrete slab or frost-proof foundation is almost always classified as a permanent, taxable structure.
• Size: Many local governments set a square footage threshold, such as 100 or 200 square feet. Any structure below this size may be exempt from property taxes, but this figure varies significantly by jurisdiction.
• Utilities: Connecting electricity for lighting or plumbing for a sink almost guarantees the shed will be considered a permanent improvement. These services integrate the shed with the main property and elevate its use beyond simple storage.
• Value and Use: A high-end, custom-built structure designed as a home office, art studio, or guest space is more likely to be taxed than a simple, low-cost storage shed. When a shed functions as a livable or workable area, it adds demonstrable value.

The Role of Building Permits and Assessors

Local governments learn about new structures like sheds primarily through the building permit process. In many areas, a permit is required for any outbuilding that exceeds a certain size, has a permanent foundation, or includes utility connections. When a homeowner applies for a building permit, that application creates a record that is shared with the municipal or county tax assessor’s office.

Once the assessor is notified of the new, permitted structure, they can evaluate it based on local criteria. If it meets the definition of a permanent improvement, its value will be added to the property’s total assessed value. Assessors also discover unpermitted improvements through other methods, such as regularly scheduled property reviews, aerial imagery, or simple drive-by inspections.

Finding Your Local Rules

The final determination of whether a shed will increase your property taxes rests entirely with your local government. Because regulations differ significantly, the only way to get a definitive answer is to contact the officials in your specific jurisdiction. The two primary departments to consult are the Tax Assessor’s Office and the Building or Code Enforcement Office.

When you contact these offices, it is helpful to have specific questions ready. You should ask about the maximum square footage for an accessory structure to be considered non-taxable. Inquire whether the type of foundation affects the tax classification and if a building permit is required for the size and type of shed you plan to build.