Can You Deduct Tree Removal Costs? When a tree falls on your rental property, it doesn’t just make a sound—it can create a significant dilemma and potentially become a sizable unplanned expense.
Whether cleaning up the aftermath of a storm or clearing a hazardous tree that threatens your property and tenants’ safety, can you write off the cost of tree removal as a tax deduction?
In this article, we’ll explain when tree removal is and isn’t a deductible expense and how to claim this deduction. Knowing when and how this expense qualifies for a deduction can help you save money and remain compliant with IRS regulations while keeping your rental property in great shape.
When is tree removal a tax-deductible expense for rental property?
Key in claiming tree removal as a tax deduction is understanding the difference between an improvement and a repair.
Improvements add value to your property and must be capitalized. Repairs are necessary for maintaining your property’s current condition, meaning you can deduct them as expenses in the year they occur.
This will fall under the category of necessary repairs and maintenance if it directly contributes to the preservation of your property’s condition or safety of the tenants.
Some examples of when tree removal is a tax-deductible expense for your rental property are:
- Removing a dead or diseased tree that poses a risk to structures or tenants
- Cutting down a tree damaged by a storm to prevent further damage
- Removing a tree whose roots are causing structural damage to driveways, sidewalks, or foundations
- Clearing trees that obstruct essential utilities such as water lines or electrical wires
- Removing trees in accordance with local safety ordinances or regulations
When is tree removal not tax deductible?
Capital improvements must be added to your cost basis and depreciated over time, so they are not considered as immediate deductions when they are the type of expenses you are incurring under this category.
Some cases that will call you to capitalize the expenses incurred by tree removal are:
- For example, the trees were cut down as part of landscaping work intended to improve aesthetics.
- Cutting down trees to open up space for new construction or expansions to the property
- Cutting down trees to add new amenities such as a pool, garden, or patio
In general, the cost is not deductible if you cut down trees from areas of property that are not being rented out, such as your personal yard if you are living on the same property.
Other popular landscape tax deductions for rental property
In addition to the removal of trees, you can also claim most landscape tax deductions for reducing taxable net income. These could go a long way to making the best of any rental property financial benefits by ensuring that it looks good and safe for existing and potential tenants:
- Routine landscaping: Mowing, weed removal, mulching. These are examples of how routine landscaping tasks can ensure that your rental property appears appealing and attractive.
- Seasonal upkeep: You can write off tasks such as snow removal, leaf raking, and seasonal planting since they may make your property safe and operational all year.
- Repairing storm damage: Any expenses for replacing plants or trees damaged by storms are written off, which can get your property back to normal.
- Pest control: Pest control services designed to keep the landscape in check, like applying insecticides to lawns, keep your tenants’ living environment safe.
- Irrigation system repairs: Expenses related to repairing or maintaining your property’s irrigation system, including fixing sprinklers and replacing pipes, are deductible to maintain landscape health.
How to claim a rental property tax deduction for tree removal
Claiming tax deductions for rental property is easy if you follow a few simple steps.
Understand IRS guidelines
The IRS has guidelines on what exactly constitutes deductible expenses for rental properties. If you want to expense the entire amount in the year incurred, make sure that your tree removal expense relates directly to the upkeep and maintenance of your rental property, rather than something that might more properly qualify as a capital improvement. You can read more about rental property tax deductions in IRS Publication 527.
Use the correct forms and schedules
Most rental property owners use Schedule E (Form 1040) to report rental income and expenses. Ensure you accurately categorize your tree removal expenses under “Other” or “Repairs and Maintenance” as appropriate.
Maintain accurate records
Save receipts, invoices, and any other documents associated with the tree removal service. In addition, keep a detailed log of the date and reason for the tree removal and any correspondence with contractors. Good recordkeeping will keep you in compliance with IRS regulations and may help you during an audit.
Get a head start on managing your rental property
Claiming tax deductions for tree removal and other landscape expenses is just one step you can take toward optimizing your rental property’s potential. Using Stessa can help take your property finances even further.
Stessa helps you track income, expenses, and deductions, keeping you organized and prepared for tax time. Its features such as automated accounting, tenant screening, and rent collection eliminate hours of busywork so that you can focus on growing your investment instead.
