Landscaping 2 yrs after rental placed in service

[AZ-Tax]

From IRS website Pub 527 :http://www.irs.gov/publications/p527/ch02.html

Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property.

Example.

You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. Some of the bushes and trees were planted right next to the house, while others were planted around the outer border of the lot. If you replace the house, you would have to destroy the bushes and trees right next to it. These bushes and trees are closely associated with the house, so they have a determinable useful life. Therefore, you can depreciate them. Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them.

Dont know if this example addresses my clients situation. Any help appreciated

[Gary2]

Dont know if this example addresses my clients situation. Any help appreciated

I don't know how we can tell, either. Care to share more details about your client's situation, besides it being two years after the rental was placed in service?

[Koss]

Depreciate or capitalize?

Are you trying to figure out whether it can be depreciated, or if it needs to be capitalized? Based on your citation, that hinges on how closely associated it is with the rest of the building.

Or are you asking whether the fact that he had this done two years after placing the property in service somehow changes the landscape?



Yeah, I know. That's really bad.

If it is closely related enough to qualify for depreciation, then the depreciable life is the same as the rental property (i.e., 27.5 years, if it's residential). But it's not retroactive to the date placed in service. You just start depreciating it now.

BMK

[AZ-Tax]

Koss Quote

Koss Quote: Or are you asking whether the fact that he had this done two years after placing the property in service somehow changes the landscape?

Yes thats correct.

[Gary2]

Koss Quote: Or are you asking whether the fact that he had this done two years after placing the property in service somehow changes the landscape?

Yes thats correct.

You still haven't described the nature of the landscaping. The quote talked about grading, seeding, bushes, trees, etc. - all things that relate to site preparation or to generally long-lived items. Is that the sort you mean?

Or do you replenishing mulch, changing plants every few years, touching up the grading, etc?

Perhaps it's the difference between the AZ climate and New England. Out here, the most common landscaping expenditures are maintenance items - so the question simply doesn't come up without specifics.