Landscape and maximizing taxes benefits

5 Replies

I will be renting out my current primary home in about 1 yr. and need to do the landscaping. Most of it is to create better drainage away from the structure to protect foundation and some is for better curb appeal and better use of the back yard. 

Trying to maximize tax benefit. The question is if I should do landscape work this year or for tax purposes should I wait until next year when my primary home is converted to a rental.

Also open to CPA recommendations in Denver metro area. Thanks!

Originally posted by @Christina Z. :

I will be renting out my current primary home in about 1 yr. and need to do the landscaping. Most of it is to create better drainage away from the structure to protect foundation and some is for better curb appeal and better use of the back yard. 

Trying to maximize tax benefit. The question is if I should do landscape work this year or for tax purposes should I wait until next year when my primary home is converted to a rental.

Also open to CPA recommendations in Denver metro area. Thanks!

I understand your concerns, but if foundation is at stake do not wait for tax implications. 


Anyway, 

Improvements will always increase your basis so it doesn’t matter when you do improvements(before or after rental). If your drainage work is considered improvement, you can do it now and you will get to depreciate it once you start renting. It is is repair, wait. Repair is personal expense. 

Landscaping and other repairs need to wait to get the tax deduction. So wait until you rent. 


@Christina Z.

Landscaping is a land improvement for tax purposes (i.e. a 15 year GDS asset). If you pay for it while you're living in the house it's generally considered an improvement and capitalized into basis. When the house is converted to a rental, you put it in service at the lower of cost basis or FMV.

You can only expense landscaping for federal income tax purposes after putting the house into service if it is below one of your safe harbor thresholds.  Otherwise, it must be capitalized but you generally may use bonus depreciation on it.

Get help from a tax pro if you're not comfortable with all of the above.

Please do it asap. Gutter and drainage issues are a HUGE reason why people have so many foundation issues. 

@Patrick Hart has helped me on a lot of projects with drainage, etc. Give him a shout and he'll take care of it. 

@Christina Z.

You got some solid advice already.

As mentioned, take care of the issue now. It will be added to the basis of the building and when converted to a rental will be eligible for depreciation.

regarding your CPA referral, you may want to reach out to @Linda Weygant