Are My Landscaping Costs Tax-Deductible?
Are My Landscaping Costs Tax-Deductible?
Properties in California can be a bit expensive. Therefore, you will want to take as many financial advantages of local tax laws as you can. This means that you need to understand what you can and cannot deduct in taxes concerning your landscaping and home maintenance costs. First, we will talk about the difference between tax deductions and tax credits. Then, we will discuss how landscaping can improve your home value (further details on that in the FAQ below), and finally, we will talk about all the ways you can leverage taxes and landscaping together to meet all of your financial goals.
Let's begin with the difference between tax deductions and tax credits. The state of California provides a lot of incentives for those who desire to make their properties more drought-tolerant. Water conservation is not only good for the environment, but it has also been legally regulated by the California state governor, Jerry Brown. Jerry Brown was the governor from 2011 to 2019. As a result of Governor Brown's efforts, 50 million square feet of lawn were removed from the state. This bill was scheduled to be repealed in January of 2021.
As you may know already, a lawn is one of the biggest water spending parts of a landscape. Instead, people are opting for traffic-tolerant succulents if they want green space, and opting for drought-tolerant shrubs, instead of pristine woody forests. However, many trees are naturally drought-tolerant if you know what to look for.
What is the difference between tax deductions and tax credits? Tax deductions reduce the official things that you pay taxes on, such as income. This, in turn, reduces your overall tax bill. Tax credits simply reduce the total amount you pay on taxes without affecting how your resources are viewed. Most of the time, people talk about tax deductions. Now you understand what credits are, too.
First Improvement: Landscaping is an official 'Capital Gains' tax deduction.
Let's say that you own a home that is worth $1.2 million when you buy it. Now, over the years, you fix up the property, make it more valuable, and now sell it for $1.4 million. That gives you a profit of $200,000. This is pretty good. Now, the IRS says that you must pay taxes on this profit. This is called "capital gains tax" and it stinks.
However, if you have spent $60,000 on landscaping, you can deduct that on the capital gains tax you have to pay. Now you are only paying capital gains tax on $140,000 of profit. This is even better.
Second Improvement: A home office makes all the difference.
Let's say that you run part or all of your enterprises from home. If you keep a home office, you should figure out what percentage of your home this is. Perhaps you have a small living space and a large home office. Perhaps your home office takes up 20% of your home. This only makes a difference if you meet clients and conduct face-to-face business out of your home. If your business is affected by how neat and attractive your lawn and driveway are, then you can deduct these costs from your tax bill.
If your home office takes up 20% of your home, then you can write off 20% of anything that contributes to the business appeal of your home. The driveway, lawn care, and any landscaping will fall into this category. You may now deduct 20% of taxes from your landscaping expenses.
Third Improvement: Repairs and maintenance are tax-deductible.
This particular deduction from the IRS is about property value. The IRS assumes that you will have to do a great deal of upkeep and maintenance on your property over the years. They assume that you will maintain your property value.
When you hire out landscaping design in Fresno, this falls under the property maintenance tax breaks for California. The IRS will give you extra room because they want you to maintain the same value on your property that it had when you first bought it. Now, let's move on to learning about the importance of landscaping.