Of all the hundreds of types of deductions you can claim as a family child care provider, landscaping is one of the most complicated.
The general IRS rules says to depreciate over 15 years items that are “inextricably associated with the land” and increase the value of the land.
Examples include fence, patio, driveway, sprinkler system, underground swimming pool, well, etc.
Landscaping is defined as trees, shrubbery, sod, plantings, grading, and landscape architect fees. What’s the difference? Landscaping is said not to have a useful life of its own, so it’s not depreciated as a land improvement.
How do you deduct landscaping?
Landscaping that is immediately adjacent to your home and would be destroyed if the home were moved or replaced
You must depreciate such expenses as part of your home over 39 years. If you installed it in the first year you began your business, add its cost to the purchase price of your home. If you installed it after you began your business, depreciate it separately as a home improvement over 39 years.
Landscaping that is installed away from your home and would not be harmed if the home were moved or replaced
You can’t depreciate these expenses at all, since land cannot be depreciated. Add the cost of these items to the value of your land, since they may reduce the taxes that you will owe when you sell your home.
If you spend less than $500 on any landscaping cost, you can deduct the business portion in the year you buy it, and avoid the rules described above. For example, if you bought 50 shrubs that cost $20 each, you can deduct the time-space percentage of the total ($1,000) as long as the receipt shows you bought individual items costing less than $500.
See my article for a discussion of the end of the $100 rule.
If you have a tree trimmed or take out a tree, you could treat this as a maintenance expense and deduct the Time-Space Percentage of the cost in one year.
Tom Copeland – www.tomcopelandblog.com
Image credit: perkins-landscaping.com
For more information about depreciation, see my annual Family Child Care Tax Workbook.