Can You Capitalize Landscaping Investments? A Guide for Homeowners & Property Investors
This image showcases a beautifully landscaped backyard featuring capitalized improvements such as a retaining wall, privacy fencing, permanent irrigation system, and outdoor lighting, which enhance property value and must be depreciated over time. The well-maintained lawn and seasonal plantings represent deductible expenses, which can be written off in the same year as routine maintenance costs.
Landscaping investments can add significant value to a property, but how they impact your taxes depends on how the property is used. For some, landscaping improvements can be capitalized and depreciated over time, while others can only benefit from an increased cost basis when selling the property.
This guide breaks down the tax treatment of landscaping expenses for homeowners living in their primary residence versus real estate investors or rental property owners.
Option 1: Homeowners (Primary Residence)
If you live in the home as your primary residence, landscaping costs generally cannot be deducted or depreciated in the year they are incurred. However, they can be capitalized and added to your home's cost basis, which can help reduce taxable capital gains when you sell your home.
How Landscaping Costs Are Treated for Homeowners
✅ Capitalized (Added to Home’s Cost Basis)
Permanent improvements that increase the home’s value
Landscaping projects that extend the life of the property or add new functionality
❌ Not Deductible or Depreciable Annually
Landscaping expenses cannot be written off as a yearly tax deduction unless part of a business use (home office, rental portion).
Examples of Capitalized Landscaping Improvements for Homeowners
If your landscaping project is a long-term investment, it can be capitalized and added to your home’s cost basis:
✔ Installing a retaining wall
✔ Adding a permanent irrigation system
✔ Building a patio, deck, or walkways
✔ Planting mature trees or hedges for privacy
✔ Major grading or land improvements for erosion control
How This Helps at the Time of Sale
When you sell your home, your capitalized landscaping costs increase your cost basis, which means you pay less in capital gains tax.
✅ Example for Homeowners:
You install a $30,000 stone patio and add it to your home’s cost basis.
Years later, you sell the home for $500,000.
Instead of paying capital gains tax on the full $500,000 sale price, the $30,000 improvement lowers your taxable gain.
🚨 Important Note:
If you qualify for the capital gains tax exclusion (up to $250,000 for single filers and $500,000 for married couples), you may not owe any capital gains tax when selling your home, making capitalization less important.
Option 2: Property Investors & Rental Owners
If you own rental properties or use real estate for investment purposes, the tax treatment of landscaping expenses is very different from primary homeowners.
As an investor or landlord, you can capitalize and depreciate landscaping improvements over time, as these are considered business expenses.
How Landscaping Costs Are Treated for Investors
✅ Capitalized & Depreciated Over 15 Years
Major landscaping projects that permanently improve the rental property’s value
Must be depreciated rather than deducted all at once
✅ Fully Deductible in the Same Year
Routine maintenance and recurring landscaping costs
Applies to lawn care, seasonal plantings, and upkeep
Examples of Capitalized Landscaping for Investors
These long-term improvements must be capitalized and depreciated over a 15-year period:
✔ Installing privacy fences around a rental property
✔ Constructing a patio, walkway, or fire pit
✔ Installing outdoor lighting for security
✔ Adding a drainage system or irrigation
✔ Planting trees or hedges as part of a permanent design
Examples of Fully Deductible Landscaping for Investors
These routine expenses can be written off immediately as business costs:
✔ Lawn mowing and regular grass maintenance
✔ Seasonal flower planting & garden upkeep
✔ Snow removal services
✔ Pest control and tree trimming
✔ Sprinkler repairs or small landscaping fixes
How This Helps Reduce Taxable Income
Unlike homeowners, real estate investors can deduct or depreciate landscaping costs to reduce their taxable rental income.
✅ Example for Investors:
A landlord installs a $40,000 stone patio for a rental home.
Instead of deducting the full $40,000 at once, it must be capitalized and depreciated over 15 years, reducing taxable income by about $2,667 per year.
However, the landlord also spends $3,000 on routine landscaping, which can be fully deducted in the same year.
🚨 Important Note for Short-Term Rentals (Airbnb, VRBO, etc.):
If you rent out your home part-time, you may only deduct a portion of landscaping expenses based on how often it is used as a rental.
If you actively manage your Airbnb as a business, some landscaping costs may qualify as direct deductions.
What If You Use Part of Your Home for Business?
If you use part of your home for business purposes (such as a home office or a rented portion of the home), you may be able to partially deduct landscaping expenses.
✅ Example for Home Business Owners:
You have a dedicated home office that takes up 20% of your home’s square footage.
If you install a $10,000 irrigation system, you may be able to deduct 20% ($2,000) as a business expense, while the rest is capitalized.
This applies to sole proprietors, freelancers, or homeowners with an Airbnb unit who meet the IRS home office deduction rules.
💡 Final Takeaways: Capitalizing Landscaping for Tax Benefits
For Homeowners (Primary Residence):
✔ Landscaping cannot be deducted annually
✔ Capitalized costs increase home’s cost basis (helps reduce capital gains tax when selling)
✔ Best for long-term improvements like patios, fences, and grading
For Real Estate Investors & Rental Property Owners:
✔ Capitalized improvements must be depreciated over 15 years
✔ Routine landscaping costs are fully deductible in the same year
✔ Best for landlords, short-term rentals (Airbnb), and commercial property owners
📌 Tax laws can be complex, and every situation is unique. To ensure you’re maximizing deductions and following IRS regulations, consult a CPA or tax professional before making major landscaping investments!
Transform Your Landscape into a Lasting Investment with Joseph Bulfamante & Son!
Enhancing your property’s landscape isn’t just about beauty—it’s a strategic investment that can add long-term value to your home or rental property. Whether you're looking to install retaining walls, irrigation systems, privacy hedges, or custom patios, Joseph Bulfamante & Son has the expertise to bring your vision to life.
Our team specializes in high-quality landscaping solutions that not only elevate curb appeal but also help maximize your property’s value. Let’s create an outdoor space that is both aesthetic and financially smart!
📞 Call us today at (914) 632-5973
📩 Email us at Daniel@jbulfamante.com
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Your landscape is an investment—make it count with Joseph Bulfamante & Son!