Tree removal can be expensive, so find out if it's eligible for a tax deduction
There are many reasons why you might want to remove a tree from your residential or commercial property, from improving the way your yard looks to being worried a diseased tree could fall and cause serious damage. If you’re taking this project on, you may also be wondering if you can save some money in the process.
Find out if your tree removal project may be tax deductible and how you can determine if you qualify before getting started.
One of the major determining factors of whether you can claim the tree removal on your taxes is whether the tree is on a residential or commercial property. There are some exceptions, but generally speaking, tree removals are less likely to be tax-deductible for your residential property.
On the other hand, if you’re dealing with tree removal on a commercial property, then your tree removal may be tax-deductible, depending on why you’re removing it (more on this in a second). This kind of property could be a house or an apartment complex that you own and rent out.
Writing off the cost of tree removal can be super helpful come tax time. After all, the average removal costs $750, but it can range between $200 and $2,000.
Tree removals for commercial properties, like if you own a rental home, can be tax-deductible, depending on the reason you’re getting rid of the tree. For example, it’s usually not tax-deductible if you’re getting rid of a healthy tree for aesthetic reasons. On the other hand, you might be getting rid of a tree because it’s posing some sort of risk to the property, a neighboring property, or the tenants.
If you’re wondering if you can write off tree removal during tax time, consider if your situation fits these scenarios:
Tree roots are damaging your foundation or plumbing.
The tree recently developed a disease.
You’re worried a dead or dying tree could fall and cause serious damage or injury.
In these instances, the removal is typically considered a cleaning and maintenance expense. Note that you can’t deduct the removal if you knew about the diseased tree before you took possession of the property. The same goes for issues like tree roots damaging plumbing. If you knew about it before you bought it, you can’t claim the deductions.
Your tree removal may also qualify for deductions if you’re doing it for commercial purposes. Maybe you’re clearing space on your property to build a new accessory dwelling unit, and it requires you to remove a tree. In this situation, it could be a land-clearing expense that is tax deductible.
Additionally, when it comes to tree removal on a commercial property or for commercial purposes, tree removal can be considered a capital improvement, or a project that improves the space and boosts its value. However, the removal only qualifies if it is part of another capital improvement project, like building a new deck or pool.
Your tree removal may be tax-deductible on a residential or commercial property if the damage happens due to a storm, earthquake, fire, hurricane, tornado, or similar situation. It has to be a federally declared disaster, after which necessary tree removals are considered casualty losses.
If you’ve figured out that your tree removal is likely to qualify for tax deductions, make sure to hire a tree removal service near you. If you do the tree removal on your own, you won’t qualify for tax breaks, no matter your situation.
Besides the tax issue, removing a tree is dangerous work and should only be attempted by professionals. If you decide to move forward with the removal, make sure to find the right tree removal company for your specific situation.
Before you assume that your tree removal qualifies for tax deductions, call your accountant. Tax laws are ever-changing (and hyper-specific to your area and situation), so the best person to consult for up-to-date advice is a licensed accountant near you.
