Tax depreciation for landscaping

Updated: January 2024

Depreciation Of Landscaping Improvements

Depreciation of landscaping improvements is an important tax saving concept for all investment property owners to understand. Done right, it can have a significant impact on the overall financial health of the owner and the value of their first investment.

Here, I’ll explore the concept and provide insight into how depreciation works in relation to landscaping improvements.

Depreciation occurs when assets are used over time and their value decreases as a result. In terms of landscaping, depreciation applies when a property owner makes tangible investments such as fencing, sheds, swimming pools, paving and other improvements that add value to the property – but may decrease in value over time due to wear and tear or other environmental factors.

Although landscaping can be expensive, the tax depreciation opportunities are an important factor to consider when assessing the long-term financial benefits associated with landscaping improvements.

Depreciation of landscaping improvements rental property

When it comes to depreciation of landscaping improvements for rental properties, there are a few considerations to keep in mind.

One being fencing. Almost every investment property of these is the depreciation of fences associated with the rental property. When a fence is erected on a rental property, the Australian Taxation Office (ATO) allows the owner to depreciate the fence over its useful life.

In the case of most fencing, the useful life is determined to be 40 years. But the Quantity Surveyor can self assess the useful life based on extenuating circumstances.

This can be beneficial as owners can then take advantage of tax deductions associated with it. Additionally, different types of fences may have different useful lives and therefore different depreciation rates.

It is important to understand the applicable ATO rules and regulations when claiming any depreciations on rental properties.

Depreciation of landscaping improvements

Landscaping improvements – known as Division 43 – are a significant investment for any property owner. They can increase the aesthetic value and resale potential of a home, as well as provide additional recreational space.

However, it is important to understand that these improvements will depreciate over time due to normal wear and tear. It is therefore important for homeowners to plan for this eventuality in order to protect their investments.

Regular maintenance and repairs should be undertaken in order to keep landscaping improvements looking their best and increasing the value of the property. Additionally, budgeting for future repairs or replacements can help homeowners ensure that they have the funds available when depreciation becomes an issue.

Ultimately, understanding the concept of depreciation is essential in order to make informed decisions regarding landscaping investments.

Types of landscaping improvements you can depreciate

Here’s a brief list of common landscaping improvements you can claim tax deductions for in your rental property. Even if it’s a commercial property.

    • Swimming Pool
    • Irrigation
    • Garden Sheds
    • Driveways
    • Pergolas
    • Garden Edging

Fencing & Retaining walls

Fence depreciation rental property

The depreciation of a fence for a rental property can be an important factor when considering the overall value of the property.

It is important to calculate the useful life of the fence, as well as any additional repairs or maintenance that may become necessary over time.

The ATO allows deductions for fences and other landscaping improvements that are considered part of a rental property.

This deduction can be taken in one lump sum, or spread out over several years depending on the expected lifespan of the fence.

It is also possible to take advantage of accelerated depreciation rules for fences and other landscaping improvements.

Taking all these factors into account will help ensure that rental property owners receive maximum benefit from their investments in fencing and landscaping.

Fence rental property depreciation

Landscaping improvements, such as fences, can be depreciated over time.

Fence rental property depreciation is the process of deducting a portion of the cost of a fence from taxable income in increments over a period of years.

 

This process helps to offset the cost of purchasing and maintaining a fence for rental properties.

Depending upon the type of fencing material and installation costs, some fences may qualify for more or fewer years of depreciation deductions.

It is important to consult with a tax professional to ensure that all deductions are compliant with current regulations.

To maximise the benefit from fence rental property depreciation it is important to understand how much can be deducted each year, eligible materials and any limitations associated with these deductions.

To get a definitive answer on all the tax deductions available to you, simply get in touch with me and I’ll personally look over your property online and let you know.

If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page. But it’s usually best to start at the beginning by visiting our home page

This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying

Published April 2023