Is Landscaping Considered A Capital Improvement?

Step back and take a hard look at your commercial property.

Would you want to shop, live, work or visit there?

In this booming commercial real estate market, there are plenty of sparkling new properties with lots of curb appeal.

It might be time to spruce your place up with some landscape enhancements.

But are they tax deductible?

Is landscaping considered a capital improvement?

David Keffer, branch manager at Level Green Landscaping, walks us through it.

First, The Need To Update

Chances are, it’s time for a boost.

“Here in the metro DC area, the commercial real estate market is booming,” Keffer says. “There’s been a lot of development for many years, and the buildings that were constructed in the 1980s and '90s are starting to look dated. They need to make improvements to their landscaping as well as to their buildings.”

The right landscape enhancements make your retail site more beautiful, welcoming, comfortable and current.  

“Shopping centers built decades ago aren’t attracting retail tenants they way they need to,” Keffer says. “We’ve landscaped four or five of these retail centers, making them appealing and competitive.”

So, Exactly What Is A Capital Improvement?

According to the Internal Revenue Service, a capital improvement meets one of these criteria:

— Fixing a defect or design flaw

— Creating an addition, physical enlargement or expansion

— Creating an increase in capacity, productivity or efficiency

— Rebuilding property after the end of its economic useful life

— Replacing a major component or structural part of the property

Basically, a capital improvement adds to the value of your property in a significant way, as opposed to repairs and maintenance, which preserve existing value.

So, is landscaping considered a capital improvement?

It depends. Consult with your tax or accounting professional about your proposed project to be sure, but here’s a look at a few projects that typically count.

Comprehensive Updated Landscaping

The landscaping that was installed decades ago to beautify your commercial property’s landscape can now actually do more harm than good.

Fifteen years ago, junipers were the standard for commercial landscape design. Low maintenance, super tough, they made sense.

But these days, those sheared junipers look dated — and make properties look dated, too. And don’t get Keffer started on Bradford pear trees. They were planted everywhere years ago on commercial properties — and they’re not even well suited to pavement areas.

How To Update

The trend today is to use a much more captivating, casual combination of flowering shrubs and trees, perennials and ornamental grasses.

We design interesting layered looks, with shorter plants like ground covers or low perennials near the foreground, slightly taller plants in the middle, and taller shrubs, grasses or trees for the back.

“Landscaping is so important in attracting customers and tenants to a property,” Keffer says.

A comprehensive update adds appeal and interest — and counts as a tax-deductible capital improvement.

Making Landscaping More Environmentally Friendly

In the 1980s, landscaping for commercial properties typically needed a lot of water, pesticides and mulch.

Updating it to make it friendlier to the environment not only qualifies as a capital improvement, but will save you money in the long run, Keffer says.

Consider plants that require less water, like groundcovers and native varieties. Natives are hardy and less susceptible to pests and diseases. Once they’re established, native plants typically need less water than non-natives.

Another strategy: Replace water-hogging spray irrigation with drip irrigation, Keffer suggests. And replace cement with porous pavers that handle water runoff better.

Updated Walkways

If your property has old cracked concrete walkways, they’re not only unsightly, they’re a dangerous trip hazard. Consider replacing portions or entire stretches of walkways with pavers that can help break up the industrial look of a long stretch of concrete.

Portions of pavers incorporated in concrete walks can help identify main entrances, crosswalks, and other areas of interest.

This kind of comprehensive re-do counts as a capital improvement, Keffer says.

Outdoor Common Areas

In the quest to attract tenants, customers and visitors, you can’t beat a peaceful, beautiful common area.

In an office setting, it helps worker morale. Create an outdoor patio where employees can eat a sandwich, read a book, chat with colleagues and hold fresh-air brainstorming sessions.

If yours is a residential property, know that tenants want to spend as much time outdoors as possible, for as much of the year as possible.

Fire pits, outdoor kitchens, grilling stations positioned in a paver-covered common area are a big draw and encourage apartment residents to gather.

Patios are a natural addition to retail centers, too. Offer an inviting place to plop down those shopping bags and rest in the shade.

Don’t forget families with kids. Consider a playscape or a splash pool. When the kids want to stay, mom and dad hang around, too.

What’s NOT A Capital Improvement

There are lots of ways Level Green crews keep your property looking great.

Mowing, weeding, blowing and edging. Fertilizing, pruning, checking your hardscape for cracks or other damage.

All important services. But not capital improvements, Keffer says.

“Those count as maintenance, more than a capital improvement,” he says.

Adding beds of seasonal color doesn’t qualify, either, he says. It’s not enough to be considered making your property like new.

Fall: The Improvement Season

Any time is a good time to consider boosting your commercial property’s appeal and updating it for the best possible competition. But time the landscaping construction for September through November, Keffer says, for the best results.

“Fall is the best time to plant around here,” Keffer says.

The soil is actually warmer now, in the fall, than in the spring. That means roots can get a good hold and get the nutrients they need. Then, after a nice winter’s rest, they’ll come back strong in the spring.

Level Green Landscaping: Improvement Experts

Is landscaping considered a capital improvement? A lot of the time, yes.

At Level Green, we’re landscape enhancement experts, and can help you update and beautify your commercial property in a host of ways — many of which are tax deductible as a capital improvement.

If you’re not already a Level Green Landscaping client, we’d love to add you to our growing list of happy customers. Our focus is on commercial properties like offices, mixed-use sites, HOAs, municipalities and institutions in Maryland, Washington DC and parts of Virginia.

Contact us at 202-544-0968. You can also request a free consultation online to meet with us one-on-one.

We’d love to hear from you.