No, your shed/building can't be deducted as an office expense. It's a capital asset and should be depreciated because it has a useful life of more than one year. However, if it cost $2,500 or less, you may deduct it as an expense, under the safe harbor election.
Just about everything you own and use for personal or investment purposes is a capital asset, for example:
- Personal investment property, stocks, bonds, and mutual funds
- Real estate or property that isn't rented out or used for business
- Your dwelling, furniture, appliances, clothing, and personal car
- Collectibles, such as a coin or baseball card collection
Common items that aren't used for personal or investment purposes (and are therefore not considered capital assets) include:
- Equipment, vehicles, and real estate used for or by your business
- Business inventory and accounts receivable
- Artwork, musical compositions, and literature you created (or was gifted/inherited from the artist)
- The part of your house that you use and depreciate as your home office, if it qualifies for a home office deduction
- Rental property
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