You can landscape your property front and back but in most cases, you don't get to deduct the cost on your taxes immediately. Instead you have to wait until you sell your home to see any tax benefit. If you run a home business, that might qualify you for an exception.
When you sell a house -- first home, second home, rental property -- you pay capital gains tax on the difference between the sale price and your adjusted basis. The basis is the original purchase price, which you adjust for improvements you've made to the property over the years. If you install new plumbing, remodel the kitchen or pay for major landscaping work, that's an adjustment. Paying to have the lawn mowed every week doesn't count.
The IRS specifically lists landscaping, installing a sprinkler system or building a walkway or driveway as outdoor improvements that adjust your basis. If you spend $5,000 on landscaping, $500 on fences and another $1,500 on walkways, that's $7,000 added to your basis. If you buy a house for $200,000, your adjusted basis is $207,000. If you sell for $230,000, that cuts your taxes by shaving $7,000 off your gain on the sale. Be careful, though -- if you pay for landscaping, tear it out and redo everything, the first landscaping no longer affects your basis.
If you're selling your personal home, the landscaping adjustment may not matter much. As long as you've lived there for two of the five years before the sale, you can exempt $250,000 in gain from tax; if you and your spouse have both lived there, you can exempt $500,000. Landscaping is more likely to make a difference if you sell a vacation or second home. Those properties don't get the main-home exemption.
If you run a home business, you're entitled to write off a share of home expenses -- and surprisingly, that may include landscaping. A tax-court ruling in a 2008 case said that if you meet clients at your home office, keeping the home looking good is deductible. If 8 percent of the house is used for business, you get to write off 8 percent of landscaping, lawn maintenance and driveway care.
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