Sheds might seem insignificant to many homeowners, but there are a lot of advantages to having them on your property.
Sheds add value to your property if they are well-maintained, add to the aesthetic of the home, and are well-developed for their intended use.
So, how much and how do sheds add value to a home? Let’s find out.
How Can I Be Sure My Shed Will Increase My Home’s Value?
If you’re thinking about selling, you may have heard that sheds can add value to your property. Typically, they won’t add much value to the property, but they may make it more enticing to buyers.
Should you add a shed before you sell your home? This all depends on your ROI (return on investment). Please don’t spend more on the shed than the value it will add to your home.
Whether you are building or hiring someone to build a shed on your property, be sure only quality building materials are used. If you want your shed to add to the home’s value, it must be permitted and all regulations adhered to.
It’s best if a shed accentuates the look of the home. If it doesn’t, at the very least, it should not take away from the home’s aesthetics. It needs to be kept in good condition. Problem points are usually the floor, the foundation, and the roof, so ensure those are kept well.
Keep in mind that a new shed that meets the above requirements will add about 1-2% in value to a home (in the United States in the 2022-2023 market). Therefore, you may not want to go over that cost if you’re having one built, repaired, or remodeled. Century 21’s encapsulates the reasons a shed can add value very well:
- If the home itself is small, typically under 1200 square feet
- If the shed has a foundation
- If the shed is in excellent condition
- If the shed has been staged to sell (like the rest of your property should be)
- When a shed is livable with applicable building codes (is wired, plumbed, and has heating and cooling)
Buyers, Beware of Those Sheds!
When buying a house that has a storage shed, be absolutely sure the shed is usable. The shed at our current residence was a big reason we chose this one over another. However, the shed was locked when we were there, and it was a seller’s market. We had to make a quick decision, and we purchased the home.
It’s been a good investment, but the shed had to be torn down. It turns out the seller didn’t have it locked to prevent theft. It was locked because the floors were dangerous, and the structure hadn’t been taken care of and was ready to fall in. So not only did we lose the storage we hoped to gain, but then we had to pay to have the thing removed.
There Is Value in What a Shed Is Used For
Sheds are a great way to store extra equipment and general stuff. This use of a shed helps you unclutter other parts of your home or your yard. It’s basic beautification – and that can make a home on the market much more attractive.
Sheds can be used as workshops. One of the prior owners of a home we purchased had his entire woodworking shop in his shed. My mother’s friend had her sewing stuff out in the shed. It kept people from getting annoyed with the loud sounds and also let them focus on their creativity.
If you use your shed as a business office, be sure to look up whether you can claim it as a business expense. The rules on this are kind of complicated, so I’ll let the IRS spell it out:
If you have a separate structure and you use it exclusively and regularly for your business, you may deduct the expenses related to the structure whether or not you can deduct your home office expenses. These expenses could include:
• Depreciation allowed on the furnishings and on the structure.
What does exclusive use mean? Exclusive use means that you must use a specific area of your home only for your trade or business. The area used for business can be a room or other space identified as separate. The space does not need to be marked off by a permanent partition.
What does regular use mean? It means you must use a specific area of your home for business on a continuous basis. Even if part of the year is slow for your business, so long as this area is set aside for the business, it is in regular use.
Your home office must be either the principal location of your business or where you regularly meet with customers or clients. You must use the area exclusively for your business. For the tax year 2022, the simplified square footage calculation rate is $5 per square foot, with a maximum of 300 square feet. Beyond this, you can then claim utilities, repairs, and depreciation.
Did You Learn Enough?
If you need to decide whether to put up a shed in your backyard to add value to your property, do some research. Find out about the local permitting and rules. Ask around with local realtors about how much value the shed you want will add to your home’s resale value. You could even walk around your neighborhood and ask your neighbors how they feel about their sheds. Did their shed add to the value of their home? Were they worth the time and money spent on them?
In most cases, sheds just come in handy. So adding one, so long as it’s fulfilling the need will bring value simply in its use.