BEST ANSWER
Hello Firsthouse, and thanks for your email.
Talk with the Building Department of your City and find out if there are any "minimum" size requirements for a closet because there may actually be a minimum. As Bill and Marilyn noted below, however, closets should be functional and the smallest functional closets (hallway closets, for example) I've seen have an interior footprint of 5 feet wide by 4 feet deep. Shallower or narrower than this, and the space becomes unusable.
As Marilyn noted, one of the first things noticed by a buyer is the size of the closet in the bedroom. Buyers tend to like larger closets with an interior space of between 7-10 feet wide by 4 feet deep, and plenty of room and shelving above the garment pole to store personal items. Closets that are smaller tend to be a "negative" feature of a home. So if you are planning to move the closet to get better use of the bedroom space, the rule of thumb is typically not to replace it with a closet that is smaller than the one you're removing.
Good luck in your renovation!
Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
Sat Jul 4 2009, 14:30