It is tax season, and it is also the time of year when people start thinking about commercial landscaping projects. One question you might have is “Do commercial landscape projects count as capital improvements?” The answer is a bit complicated.
Before we continue, please note that we are not tax professionals. In this, and any other tax-related decision, please consult your tax professional for a thorough review of your individual situation.
Defining what is generally considered a tax deduction for a capital expense, you can assume the following:
- It adds greatly to the value of the property
- It is to be used as a permanent addition to the property
- Its removal would damage the property
Outdoor Gathering Spaces and Entryways
Most of the time outdoor hard spaces are considered a capital improvement. This may include adding a patio for your tenants, or a covered waiting or eating area for your dining guests, or a safe, covered drop off zone at your entryway.
Whatever your individual business needs may be, these types of permanent structures that improve your property’s appearance and function are often considered deductible for taxes.
Complete Landscape Renovation
You may consider a complete landscape renovation for several reasons.
- Update your current facility to attract new customers
- Improve environmental friendliness with native species
- Winter took a particularly hard toll on your beds
- Other damage to current landscaping
- Improve drainage to your property
Many times these overhauls can be considered deductible when it comes time for taxes to be filed. They are used to permanently improve your facility, attract new clients, and extend the life of your property. Not to mention they make your space look fresh, new, and can cause people to take a second look.
Sometimes, but not always, lighting can be a deductible expense. Commercial landscaping projects that completely replace lighting to upgrade to energy efficient LED lighting can be considered a capital expense.
Also, if you add to or completely overhaul your lighting in an effort to improve the security of your property it can also be deductible. It can also help your property be more visible at night and more attractive to potential customers.
What is Not Considered a Capital Improvement
Regular maintenance of your facility is not considered a capital improvement. For example, scheduled mowing, watering, bed planting, etc. are not deductible. Singular replacements are not deductible, either.
So, if a customer backs over a sidewalk light, that replacement, however expensive, is not considered a deductible expense.
Hittle Helps with Any Commercial Landscaping Projects
Still unsure about commercial landscaping projects counting as deductible, capital improvements? Hittle can help! We have 45 years’ experience serving the central Indiana area and have completed too many of these projects to count!
We can help at any step of your project; whether it is realizing your vision or making suggestions for where to start. Whatever your needs are, we can help.
We can even come to your property and provide you with design ideas for more usable space, a complete overhaul, or adding lighting. Contact us to get started on your commercial landscape project!