Are Trees, Shrubs & Landscaping Costs Tax Deductible?

Every day, people who own a home or commercial property understand these constitute investments and want to maximize their tax deductions. Living with family members does not diminish the fact that a house is often the largest single purchase you make in a lifetime. Commercial properties, by definition, represent business assets that require frugal money management to turn a profit. And, of course, living in the technology age allows an increasing number of people to work from a home office, making that house something of a tweener.

In some respects, real estate investments involve expenditures owners hope to include as tax deductions at some level. While replacing a damaged roof may be relatively easy to post on a tax form, other expenses seem murky. Perennial plants, shrubs, and trees, among other landscaping assets, may sometimes offer reduced tax liability. Although the information included in this and other reviews about landscaping assets does not constitute legal advice, we hope it prompts everyday people to consider saving their receipts and consulting with a tax expert.

Can You Deduct Reforestation Expenses?

The short answer is yes, but only to some degree. As the U.S. Department of Agriculture said, taxes are treated differently depending on the type of property someone owns. Property owners must first decide which category it falls under regarding tax deductibility. These include the following.

Personal-Use Property: Although planting to flesh out your home's landscape can be challenging to deduct, there appear to be exceptions. Landscaping expenses caused by a natural disaster, such as a wildfire, hurricane, or tornado, may allow homeowners to check the box. To get IRS credit for replanting, the event may require a state of emergency or official disaster status from state or federal officials. Keep your receipts and a record of the official emergency order posted by government agencies.

Business Property: Deductions are typically appropriate and are related to tracts of land used primarily for timbering. When a business is "materially participating" in the sector, the trees used for reforestation may be fully deductible on a Schedule C form. Until 2018, the federal government also allowed related expenses on Schedule C for timber investments.

It's also essential for landowners to understand that tax deductions may not necessarily come into play if you are a passive investor in woodlands. The government may consider such land recreational or timbering endeavors a hobby. The IRS explains, "Qualifying reforestation costs are the costs of planting or seeding for reforestation. Qualified timber property is property that contains trees in significant commercial quantities." The best way to deduct reforestation expenses is to engage in the practice of timbering that meets the threshold. This status usually allows you also to deduct pest control, firebreak, and limited travel expenses.

People in the agricultural sector may also enjoy tax credits for planting trees for conservation purposes. These may include protecting against erosion caused by heavy rains and waterway flooding. Protecting fields by creating a line of windbreak trees may also qualify. Getting the tax deduction you deserve from the IRS can be challenging. That's why it's advisable to work with a certified tax professional.

Planting Trees & Shrubs At Home

The conventional wisdom regarding landscaping expenses usually involves curbside appeal and increased property values. Plant gorgeous flowering perennial plants, ornamental shrubs, and that inspiring Dogwood in the front yard, and resale values will pick up. It's reasonable to believe your well-manicured gardens and plant assets will earn a return on investment.

However, living in a time when 25 percent of employees and business professionals no longer commute to the office daily constitutes a game-changer. Upwards of 4.3 million people worked from at least part-time in 2020. According to reports, the U.S. is on a trajectory to exceed 36.2 million remote workers by 2025. That means you may possess an IRS-qualifying home office now or shortly.

The "home office" tax equation may come into play regarding deducting shrubs, trees, and perhaps perennial gardens. Sole proprietors who hold meetings with clients at their home office generally deduct the space used for business. That deduction often expands to a percentage of the electric, water, internet, trash pickup, and other everyday household expenses. Landscaping costs are generally not off the table, and trees and shrubs could meet capital expense standards under the right conditions.

The conventional wisdom has been that if you utilize 20 percent of your residence for business purposes, that number extends across other expenses proportionally. Maintenance, upkeep, and aesthetic enhancements usually count as well. What could be a more significant improvement than ornamental shrubs and shade trees that impress clients?

Business-minded community members who own rental properties generally deduct landscaping, replanting, and enhancements. The salient point is that any time you plant a tree, shrub, or order perennial plants, consider whether the cost has a business-related effect. Keep the receipts and discuss the upgrade with your tax professional if it does. Reforestation and landscaping upgrades may reduce your tax liability. Now that's a win-win.