You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business.
In general finished garages do not add value to your home. It may be a selling point for someone but it doesn't actually increase value. There is no reason your taxes would increase here.
If you have a structure on your property that isn't connected to your home and doesn't qualify as part of your dwelling — like a detached garage, fence or shed — it is likely not protected by dwelling coverage.
Building a garage, whether attached or detached, should always add value to your home. But it's essential to consider the ways that it could decrease your resale value. Just like any other home project, your garage addition should be thoughtfully designed and customized to fit both your needs and space itself.
While you might need to pay some extra property taxes for the value you've added to your property in the form of a detached garage, that bill might not be as bad as you fear. The best approach is just to consider the property tax factor as one component of the overall price of the project.
Separate Structure
You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers.
It's not a separate dwelling. It's an out building, the same as a detached garage.
According to HomeAdvisor's 2024 article, an average detached garage cost falls between $20,000 and $45,000. However, if you're considering a standard modular garage—like those offered by Glick Woodworks—the average cost of a garage is closer to $23,000.
A detached garage will usually cost 10% to 15% more than an attached garage. So, is building a garage worth that investment? The average ROI of a garage addition is 64% to 81%, which equates to an estimated $20,000 to $35,000 addition on your home value.
Because a detached garage can serve as an addition to an existing garage, many homeowners opt to do so. But before you ask your builder to start digging for a new garage extension, think about a few things.
Whether you have a detached garage filled with vehicles and ATVs or have it set up as the ultimate party spot, you'll be happy to know that your garage and belongings are safe under other structures coverage. All garages, whether attached or not, are covered by a homeowners insurance policy.
The garage does not count towards the square footage of a house, as that is considered an unfinished space. A garage will only count towards the square footage of a home is if it has been legally converted into a living space.
While for sheds, a concrete foundation is optional most of the time, a garage foundation is essential. It's best to plan for pouring a concrete garage foundation before you begin building.
1. Depreciation Expense. A commercial building often begins depreciating as soon as you purchase it. Fortunately, the IRS allows you to depreciate a commercial building over 39 years, providing substantial tax benefits.
It is a myth that all home improvements will result in a tax increase, as there are many projects you can invest in that will not require reassessment. For example, remodeling existing rooms, painting both the interior and exterior and replacing flooring won't see an increase in your property taxes.
If you want a workspace, a detached garage is a better option — especially if that work makes noise. Do you want the garage to have livable space? Both attached and detached garages can add significant living space as a guest house, in-law suite, or even an apartment to rent out for extra income.
A “functionally adequate” garage in a typical market might add $5,000 to $25,000 worth of value, says Mike Ford, a Southern California-based general certified real estate appraiser since 1986. In high-end markets, the value might be higher.
If you're looking to maximize your home's value, consider converting your garage into a livable space. Adding a bedroom, home office, or even a rental unit can significantly boost your home's market value. While this is a more substantial investment, the payoff can be substantial.
The most expensive part of building a garage is typically the labor and materials. Skilled labor, including tasks such as framing, roofing, and installing electrical systems, can significantly drive up costs.
What Garage Building Solution Is Most Budget-friendly? Building in the pole style is one of the easiest and most economical ways to construct a garage. These are frequently called pole barns or post-frame buildings, and many people think they're better than conventional stick-built garages.
Most spend between $900 and $1,300. Adding plumbing to a detached garage or shed roughly 20 feet away from home will cost $1,100 for the average homeowner. Homeowners pay between $900 and $1,300 just to run the lines when adding plumbing to a shed or detached garage.
A detached garage doesn't count as living space. An attached garage may count as living space if it meets specific requirements. Converting your garage to a livable space may increase your home's value.
You can avoid garage planning permission if your garage: Is not within 12 feet of the boundary of your home, the maximum height is 16 feet, and the eaves are at least 6 feet away from the boundary.