While deciding whether to build a new home feature, financial considerations will likely determine the project’s viability. However, with something simple like a new fence, most homeowners think they only have to consider the cost.
Because home improvement projects are usually tax deductible, some people ask, “Is a new fence tax deductible?” Surprisingly, your new fence could afford you tax deductions. Understanding the different ways to achieve tax benefits from a new fence can justify the project expense.
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Rules for Different Property Types
Property type serves as one of the primary factors determining a new fence project’s tax benefits. From commercial to residential properties, every building type has its own rules and regulations for tax deductions from new fence projects. Gaining clarity on these rules can help answer the question, “Is a new fence tax deductible?”
Primary Residence
Unfortunately, new fences built at a primary residence do not qualify as a tax deduction. Nevertheless, you can find other ways to achieve tax savings from new fences at these properties.
Adding any new feature to your Lakeland home increases its tax basis. The tax basis of a property refers to the amount a homeowner invests in their property over time.
While not an immediate tax benefit, your tax basis helps decrease the taxable profits from the sale of your property. As a result, investing in a new fence can provide long-term savings and help you get more when selling your home.
Business Property
Lakeland business owners likely understand the rules governing business expense deductions. These deductions result from expenditures that are “ordinary and necessary” to the operation of an enterprise. Thus, your company’s new fence can easily fall under this category.
It may or may not seem obvious how your new fence qualifies as an ordinary and necessary expense. However, there are many ways to justify this expense in the IRS’s eyes.
Protecting your business property and key assets may be enough to receive a tax deduction. Otherwise, replacing a broken, hazardous fence, keeping employees safe, and clearly marking property lines provide other ways of validating the deduction.
Rental Property
Do you own a rental property? If you do, you understand that these residences become their own businesses. Thus, any home improvements made to a rental property qualify as a tax deduction.
However, even homeowners who rent only part of their property can obtain some tax benefits from a new fence. If you rent a portion of your property, you can use the percentage of the property that operates as a rental and receive that much of a tax deduction from your new fence expense. In the modern sharing economy, taking advantage of these savings is essential.
Other Rules
When asking, “Is a new fence tax deductible?” you might wonder about other facets of the issues like repair projects and do-it-yourself jobs. Understanding these other rules illuminates the whole tax picture of a new fence project.
Repairs vs. Replacements
Repairs and replacements present a bit of a gray area for fence tax deductions. Lakeland homeowners forced to repair a broken fence will not receive the same tax benefits as those who install a brand-new one. That’s because these jobs fall under the category of home maintenance and offer no benefit for a tax basis.
Completely replacing an old fence qualifies for tax benefits. Upgrading to a completely new fence incurs higher costs and counts as home improvement.
Changes for DIY Projects
DIY fence installation projects provide significantly lower tax benefits. When homeowners choose to install their own fence, they can’t deduct the cost of their own work. As a result, DIY fence projects prove far less tax favorable.
Install a High-Quality Fence With My Fence Company
Not sure which side of the fence should face your neighbor or how to deduct fence expenses on your taxes? Fence experts from My Fence Company offer professional guidance on every issue related to fence installation, repair, and replacement in Lakeland, FL.
Fence contractors from My Fence Company bring with them the licensing, certifications, and experience to execute every job successfully. Prospective clients can also explore financing options to alleviate the costs of fence installation.
Still asking, “Is a new fence tax deductible?” For more information about the tax rules for building a new fence, consult professionals from My Fence Company by scheduling a service consultation today.
