02 Apr Taxes and your new residential wood fence
The clock is ticking! If you haven’t already filed your income taxes with the IRS, you’ll need to do so by the deadline on April 17, 2018.
If you have recently installed a modern wood fence, you might be wondering if it constitutes a tax-deductible expense. It’s not a simple yes or no answer, but then since we’re dealing with the IRS, you probably weren’t expecting anything to be simple and straightforward.
IRS Publication 530, Information for Homeowners, may be able to answer your question. It covers a range of issues, including:
- How you treat items such as settlement and closing costs, real estate taxes, sales taxes, home mortgage interest, and repairs.
- What you can and can’t deduct on your tax return.
- The tax credit you can claim if you received a mortgage credit certificate when you bought your home.
- Why you should keep track of adjustments to the basis of your home. (Your home’s basis generally is what it cost; adjustments include the cost of any improvements you might make.) What records you should keep as proof of the basis and adjusted basis
We aren’t tax experts, so don’t take our word for it. Fortunately, the professionals at Intuit weighed in on the subject, explaining that, “Repairs, maintenance, and improvements to your personal residence property are not deductible from current income. If you make major improvements which increase your home’s market value or extend its useful life, you can add the cost of the improvements to the cost basis of your home, and you get the benefit when you sell.”
IRS Publication 530 includes a section on figuring the basis of your home that you may want to check out.
In other words, the list of personal expenses that you are allowed to deduct includes expenses for medical care, property taxes, mortgage interest and charitable contributions. It does not include fencing your yard.
But wait! As Bizfluent.com, a one-stop shop for answers to your micro and macro questions about business, explains, there are exceptions, reporting that:
“The Internal Revenue Service defines rules governing the deductibility of expenses. When deciding whether fencing your yard is tax deductible, taxpayers must evaluate how the fence is used. If your yard requires a fence for a legitimate business purpose, claiming a tax deduction for the fence is straightforward. But keep in mind that the entire cost of the fence and related labor cannot be deducted in the year in which the fence is installed. Instead, it must be deducted over several tax years.”
So how do you determine if your new PVC fence might serve a “legitimate business purpose”?
“The IRS allows you to deduct expenses related to running a business if the expenses are necessary and ordinary to the running of the business,” Bizfluent says. “For example, the cost of fencing your yard might be ordinary and necessary if you run a kennel, day care or scrap-metal yard for profit. Fencing the yard of a rental property might also be necessary and ordinary.”
This information is provided only to point you in the right direction. While we know just about everything there is to know about installing residential wood fencing, we are definitely not tax experts. You should talk to a tax professional to be sure you are handling things properly
And as soon as you figure it all out, just remember Congress passed new tax legislation, so next year it might all change.
Here at Zepco Fence, the leading wooden fence company for discerning homeowners in Palm Beach County and Broward County, some things never change – like our commitment to quality and service.