If you have a commercial property, you might want to think of a few ways to improve it. Curb appeal can go a long way to attract new clients, visitors, or tenants. With a few landscaping enhancements, you can spruce up the appearance of your outdoor space. However, are these improvements considered a “capital project?” Here are a few things you need to know whether these improvements are considered a tax deduction.
Do You Need To Update?
Does your commercial landscape look a little tired? If that is the case with you, it might be time for a needed boost. Those properties built in the ’80s and ’90s are starting to look dated. When the properties are improved, the landscape can also get spruced up. With the right landscaping enhancements, your commercial space can look modern, welcoming, and comfortable.
What Is Capital Improvement?
A capital improvement can lead to significant tax breaks for your property. However, you want to make sure that you can legally take these deductions. According to the Internal Revenue Service (IRS), a capital improvement must meet specific standards, such as:
- Creating an increase in efficiency, productivity, and capacity
- Fixing a flaw or defect in the design
- Building a physical expansion or addition
- Replacing structural or major components of the property
- Rebuilding the property after it has reached the end of its useful life
In simple terms, a capital improvement project can add significant value to your property. Maintenance and repair projects are not considered capital improvements since they only preserve the property’s existing value.
Is Landscaping Considered a Capital Improvement?
If you want to know the answer to your specific situation, you will need to contact an accounting professional. With their advice, you can determine whether you can take a tax break for your next landscaping project.
Here are some of the projects that are typically considered capital investments.
Creating a Comprehensive Landscaping Update
All that landscaping that was installed in the past few decades could be bringing down the value of your property. For example, junipers were all the rage for landscaping in the 1990s. They were durable and low maintenance. However, many of these old junipers have a rugged appearance and make properties look dated. Some trees and shrubs were prevalent on commercial properties, but they were not well-suited for those concrete or paved spaces.
Perennials, ornamental grasses, and flowering shrubs are more in vogue. These elements give a more casual and captivating appearance to a commercial landscape. Low perennials and ground covers can provide some interest to your space, while taller trees and shrubs can dress up the background. These projects can add some appeal, but they are also considered a tax-deductible capital investment.
Making an Environmentally Friendly Landscape
In the past, commercial properties required plenty of mulch, pesticides, and water to keep it looking green throughout the year. However, there is a push to reduce water usage and avoid any harmful pesticides. Some companies provide commercial lawn care services that can help you design a beneficial landscape for the local environment. You might want to plant those species that need less water. Some of those native plants are less susceptible to disease and pests. When you update your space, it is considered a capital improvement. Along with that, you can help the environment and save money on those water bills.
Updating Your Walkways
If you have any cracked concrete walkways throughout your property, they can bring down the value of your space. Along with that, these damaged walkways are a dangerous trip hazard. You should replace parts of the pathways with pavers for a more aesthetically pleasing look. These pavers can identify those main crosswalks and entrances. Any type of comprehensive renovation counts as a capital improvement.
Improving Those Outdoor Common Areas
If you want to attract visitors, customers, and tenants, you will want to create a beautiful common area. In those office buildings, it can help to boost the morale of your employees. While they are on a break, the employees can relax for lunch or hold outdoor brainstorming sessions.
For those rental property owners, you want to create great spaces for your tenants. Many of these renters will spend plenty of time outside enjoying the weather. Those outdoor kitchens, fire pits, and grilling stations will encourage residents to gather and socialize. If there are families in your complex, you might want to add a splash pool or playscape. Yes, all these improvements are considered capital projects.
What Is Not Considered a Capital Improvement?
While these projects are considered capital improvements, not all of these jobs fall into that category. Commercial lawn care companies can come out to your property to edge, weed, and mow. Along with that, these crews prune and fertilize around your space. However, these projects are not deemed a capital improvement. Most of those projects are considered maintenance services. These services can make your space look nice, but they are not enough to be a tax-deductible improvement.
We Can Help Improve Your Space
Many of these large landscaping projects can be considered capital improvement. However, there are some improvements that will not qualify. While you need to consult with a tax professional, you can start to dream up these projects with help from Charlestown Landscaping LLC. We can help to beautify your space in several ways, including designing those tax-deductible projects.
We would love to discuss your next capital improvement project with you. We can take your ideas and turn them into a stunning commercial landscape. Our team understands the needs of these properties.
We can create a plan that will boost the look of your space so that you can appreciate it for many years to come. Along with that, we can help you maintain these outdoor spaces throughout the season with our lawn care and snow removal services. Maintaining commercial landscaping can be a hassle. However, you can avoid all the hard work when you hire us for the job. If you would like to schedule a consultation, please give us a call at (610) 608-3965.