Is the purchase price of a shed counted as an addition or improvement when figuring the cost basis for the sale of my home?

[TinkerBell01]

The shed was not attached to the house.

[DavidD66]

It could be considered an improvement if you need to increase your cost basis to minimize a taxable gain.

[TinkerBell01]

Can I include the $50.00 fee I had to pay to get the permit for the shed to be placed on our property?

[JoannaB2 · Accepted solution]

It depends.  If the shed was for business purposes, the permit may be deductible as business expense. Otherwise, it is not deductible on your income taxes.  A shed, when used for a business purpose, can be depreciated according to the Internal Revenue Service (IRS) guidelines. If the shed is only used for personal uses, it will not be tax-deductible.