Definition of "Do tiny homes depreciate?"

A very common real estate question is:Do Tiny Houses depreciate?

Short answer is: yes, tiny houses do depreciate. But let’s explain the “why”s so we get to the bottom of the exceptions.

Because most tiny houses are built on wheels – whether as RVs and motorhomes or as a standard house with a wheeled axis beneath it – they deal with the same logic of automobiles and depreciate because of wear and tear. Mobility is a function of the house, so – with time – its ability to move will get diminished and, naturally, so will its value.

Is there a chance a tiny house on wheels will not depreciate? Yes, but they are - forgive the pun - tiny. Maybe if the Tiny House in question is of a very unique and valuable nature, if the RV is a collectible antique – which, as a whole, is quite difficult to happen – and not only your upkeep of it is superb but the demand for it is high and the supply low… then, blessed be thy heavens, the answer to “Do tiny houses depreciate” becomes not for yours.

One could argue that all houses depreciate over time because all houses suffer from normal wear and tear. That what actually appreciates is the land; not the physical structure of a home. That’s accurate. In a primal rational sense, what drives the prices up and down is the area in which a home is built. This becomes evident when we see two houses that are completely the same - same square footage, number of rooms, materials; everything! - but with different prices, because one is within a high-demand neighborhood and the other within a very non-special one. But the fact is that - while a regular house’s depreciation often becomes overlooked because of the hassle of rebuilding from the ground up is too big - when it comes to Tiny Houses on wheels, the depreciation becomes a factor because to move the home out of the land is very simple. So, to include a tiny home in the mix of what, in reality, is a transaction of land, the home buyer – even the one who’s interested in the fascinating trend of tiny homes – might point out to depreciation of the structure in order to get to a better price in the negotiation.

So; do tiny houses depreciate? Yes, tiny houses depreciate. Like all houses, but people pay attention to their depreciation and not to regular houses’.

Real Estate Tip:

If you don’t care for depreciation, and you’re moving forward with the plan of living in a tiny home; check what states allow tiny houses to see if you’ll need to move or not.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Questions

Popular Real Estate Glossary Terms

Amount the taxpayer gets back when he or she files the tax return at the end of the reporting year because taxes were overpaid for that year. The tax overpayment equals the tax payments ...

Clause in a percentage lease permitting the landlord to cancel a lease and recover the property if the tenant's sales fall below a specified level. Clause in a lease permitting the ...

Individual with legal privileges and obligations. The legal term is sometimes used for a corporation. ...

The lessee becomes a lessor by subletting the property to a third party. Typically, the sandwich leaseholder does not own or use the property. ...

A judicially approved plan in which a persons obligations are paid over three years. It is an arrangement for the repayment of debts which permits a credit user in severe financial straits ...

Agreement in which the contract price to build something is equal to the total costs incurred plus a predetermined profit. The profit may be based on a percentage of cost (e.g., 20% of ...

The unadjusted basis of assets is the actual price paid for purchasing an asset without any reductions from depreciation deductions. In order words, the unadjusted basis is an asset’s ...

Approving or permitting an action to occur. ...

Aerial photos are photographs taken by cameras mounted in aircraft or satellites. Aerial photos are more commonly used in the industrial Real Estate Market to get a better feel of a ...