Pro Advice

When a fence is a tax deduction

Not only does a fence beautify and safeguard your property, but it can also be a tax deduction. When you use part of your home for business, you may be able to claim a fence as a deduction the following April. And when your home is used wholly as your residence, you may be able to claim the deduction when you sell your home down the road.

Either way, the fence you purchase today may earn you a return in the future.

You may be able to claim your fence as a tax deduction.

So now that this last tax cycle is behind us, and you’re looking at ways to spend your return, maximize your return next year, or grow your tax basis (the amount you’ve invested in your home over time), consider installing a fence. Keep reading to learn more.

Home improvements yield tax benefits

Home improvements are things like a renovated kitchen or bathroom, a finished basement, or even a new fence. Anything that adds value to your home qualifies, and the IRS rewards homeowners for investing in these updates by allowing them to deduct home improvement costs from the profit that they eventually reap from their house sale.

So, for example, if you sell your home for $100,000 more than your original purchase price, after investing $25,000 in home improvements, you’ll only need to pay taxes on your $75,000 profit.

When a fence is needed for your home business

For those readers who operate their business out of their home, there are times when a fence may qualify as a business deduction. If a fence or gate is needed to ensure the safety of your business, for example, you may be able to deduct part of its cost. If a new fence is required to eliminate a safety hazard for clients visiting your home office, you may likewise qualify for a deduction.

Business deductions should be filed the year that the project is completed.

Repairs, DIY, and other things to consider

While filing taxes is not a simple process, we’ll leave you with a few final thoughts on how fence costs may come into play:

  1. The IRS does not allow homeowners to claim repair costs (including fence repair) on their taxes, so consider this point before you decide whether to repair or replace your fence.
  2. Homeowners cannot claim their own labor hours. If you’re looking at taking on fence construction as a DIY project, be aware that only your costs for materials are permissible.
  3. If you rent part of your home, your newly installed fence may be a legitimate deduction. Consider that line item on your tax forms as well.

When you hire AMM Fencing, we create the redwood fence of your dreams. Think outdoor barbecues, safeguarded children, and free-roaming dogs.

But also consider the potential tax deductions that may be yours.

It is possible to achieve both.

Please consult an attorney or tax professional regarding your specific legal or tax situation, as this material has been prepared for informational purposes only and should not be relied upon for tax, legal, or accounting advice.

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