A Shed is Not Real Estate

A Shed is Not Real Estate

Many Pennsylvania municipal governments use zoning laws to regulate the use of storage sheds. In many municipalities, land owners who buy commercially available prefabricated storage sheds must apply for zoning permits and also must observe local municipal regulations that limit how close to property lines sheds may be placed. Some Pennsylvania municipalities also tax the sheds, by including the sheds as a part of the owners’ real estate, raising the assessed value of the property after the purchase of shed. Typically, county assessment authorities discover the sheds by monitoring zoning permits.

A Pennsylvania shed-owning homeowner protested the increase of his taxes, and by appealing his case to the Pennsylvania Commonwealth Court, he secured a judicial decision that benefits other Pennsylvania shed owners. The homeowner purchased a 10 foot by 20 foot shed, with a garage-style rolling door and wooden floor. Delivered to his property by a roll back truck, the shed was placed on support beams sitting on a bed of stone. The shed did not have any plumbing, electricity or heat. The shed was not fixed or attached to the beams on which it simply rested. The county assessment authorities followed up after receiving notice of the zoning permit, and raised the homeowner’s property assessment by more than $2,000.00. The increase in the assessment triggered an increase in the homeowner’s school taxes, county taxes and township taxes.

While he lost his local challenge, the homeowner prevailed in his state court appeal. The Pennsylvania Commonwealth Court reversed the county tax assessment increase, and noted that the only buildings which may be assessed for real estate taxes are those “permanently attached to the land or connected with water, gas, electric or sewage facilities.” The county court had focused on the homeowner’s intention to use the shed permanently; the Pennsylvania Commonwealth Court emphasized that a physical, permanent attachment to the land is a crucial element if a building is to be included in the owner’s assessment. The Court noted that a building or shed is not “attached” to the land if it is “held in place by its weight alone.” Some “substantial connection” affixing the building to the land is required before a building or shed can be assessed for real estate tax purposes

Homeowners who buy storage sheds must first consider safety, manufacturer’s installation specifications and sound construction principles in deciding how to situate a storage shed. But if simply placing the shed on the ground is equally acceptable to affixing it to a foundation or to another structure, homeowners can avoid increased real estate taxes by refraining from affixing the shed. Likewise, because a connection to electric services will result in increased taxes, the decision whether to run an electric line to a shed must be made with taxes in mind. It is not yet clear whether a poured foundation, as opposed to support beams, could affect the potential for an increased assessment. But given the Commonwealth Court’s clear focus on “attachment,” it would appear that the existence of a poured pad will include a focus on whether the shed is “attached.”. Homeowners whose sheds have already been assessed as taxable now have the right to request a re-assessment in light of this decision.

Cite

Pederson v. Monroe County Bd. of Assessment Appeals, 84 A.3d 402 (Pa.Cmwlth. 2014).