Have you considered that our generation might be the last to remember life before the digital age?

In 1992, all property tax questions came to me by phone. I could hear voices, sense urgency, and build rapport with assessors and appraisers through small talk. If my answer wasn’t quite right, we engaged in dialogue—what IAAO 400 calls feedback, a crucial skill for effective communication. I sometimes miss those conversations. If someone needed a written response, they’d send a letter, which might arrive a week later.

Today, most property tax questions and answers happen via email. Recently, one exchange stood out as something worth sharing in a blog post. Blogs are a digital-age tool I don’t use enough, but I bet across NC, we have countless emails that could be turned into blog posts—creating a shared space for these discussions..

Question: Hey Kirk hope you are doing well, Quick question, do you know where in the machinery act it addresses sheds or outbuildings?  I am curious of the definition, and law on taxing it.   if a shed is sitting on piers or skids regardless of size is it taxable being it’s not “permanently affixed” to the property and only being held in place by gravity? I have a taxpayer challenging this. Thanks.

Answer:

I’ll do more digging on this to see if a published answer is already available, but generally:

1. All property, including sheds and whether or not they’re real or personal, is taxable unless there is an exemption or exclusion for the property. NCGS 105-274. Sheds are not specifically exempted.

2. The closest applicable exemption might be for household personal property. However, for a shed to qualify, it must first lose its classification as real property and then meet the definition of non-business property in NCGS 105-275(16). While most sheds wouldn’t fit this category, one made of plastic and intended for indoor use—such as in a garage—might be an exception if placed in a yard..  – Kirk

Reply:

The sheds in question, are wood 10×10 and another is metal 5×10,  one on blocks, the other on skids. Both would require effort to remove, but are not permanently affixed to the land via a foundation. His argument is they’re not permanently affixed so they should not be considered real property. So I guess that’s my real question, are sheds real property if not affixed?

Answer:

Sheds can be real property, even if not affixed. While permanently affixed sheds may be real property, the law clearly requires buildings and structures to be real property, without imposing the requirement of being permanently affixed. I think the sheds you describe are real property, especially if the assessor has classified them that way in the county’s rules used in appraising real property – required in NCGS 105-317.

Further, the definition of real property in NCGS 105-273(13) reads:

(13) Real property, real estate, or land. – Any of the following:

a. The land itself.
b. Buildings, structures, improvements, or permanent fixtures on land.

The “or” in subsection (b) is significant—being a permanent fixture is not required for something to qualify as a building or structure. NC counties, to my knowledge, lawfully appraise sheds and outbuildings as real property if they are considered buildings or structures. They could only consider them personal property if their character prevents them from being recognized by the assessor as a building or structure. In that extreme, such a shed/property might be considered personal property but would still be taxable as personal property unless the assessor also considered it non-business personal property, under NCGS 105-275(16) which includes even more qualifications for exemption. The shed would have to lose it’s character as a shed and become more of a lawn tool or lawn equipment to qualify for that exemption.

A shed can be tangible personal property under NCGS 105-273(14) only if it is first considered personal property by the assessor, as opposed to real property under NCGS 105-273(13) and NCGS 105-317(a).

Helpful property law guidance for distinguishing real vs. personal property includes factors like the level of attachment (as you have addressed in the question), as well as the owner’s intent regarding permanence and use. Since anything can be moved, the key question is: Is the shed designed and intended to function as a movable structure, like equipment used to transport its contents? Or is it meant to remain in place and shelter its contents?

In summary:

  • If a shed is still recognizable as a shed, it generally aligns more with “building” or “structure” rather than “tangible personal property.”
  • Attachment to the land or a building is not the only factor used to determine classification between real and personal property. Intended permanence and use are equally relevant.
  • A shed that moves frequently may be a way to evaluate its classification. A shed that remains in place and serves as an outbuilding is more likely to be real property, whereas a shed designed for frequent relocation (e.g., a trailer-style storage unit) may be personal property.
  • To be exempt completely, it must also not be a trailer designed to be registered with DMV. A trailer-style unit in the previous example would remain taxable in that instance, but a lightweight plastic storage unit, for example, that can be moved easily and is also not used for business purposes might qualify under the non-business personal property exemption, even if it still looks like a shed.
  • It is a good idea for the assessor to define the rules here for both appraiser and property owner. Use pictures and examples if needed. NCGS 105-317(b)(1) and (b)(3) require rules like this to be available so property owners can know the rules used in appraising real property.

Kirk