Yes. A fence does fall under what is considered capital improvements. As you pointed out, in your case, it will add to the value of the home.
- Examples of exterior improvements include those made to roofs, landscaping, drive and walkways, storm doors and windows. Upgrading or installing sprinkler systems, a swimming pool or a fence are additional qualifying exterior improvements.
As long as your fence falls into the category explained by @Carl and myself earlier in this conversation.
If the improvements exceed $10,000 or 2% of the adjusted basis, the expense does not qualify.
Again if the cost of the fence, is under $10,000, but cost of the fence exceeds 2% of the unadjusted cost basis of the building you would have to depreciate it. Here are the rules you need to meet to take this election:
- Your gross receipts, including all your other income, are $10,000,000 or less.
- Your eligible building has an unadjusted basis of $1,000,000 or less.
- The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
- 2% of the unadjusted basis of your building or
- $10,000
- This election for building improvements is called the Safe Harbor Election for Small Taxpayers. If you decide to take this option, a form called Safe Harbor Election for Small Taxpayers will show up in your tax return. This election will apply to all your businesses, rental properties or farms. (IRS Tangible Property FAQs)
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