Rental property; spent $12,000 on a landscaping project can I expense this or do I have to depreciate it? Can I do both or one or the other?

[rockiesmike]

Rental property expense $12,000 for a landscaping project, remodeled the property to Xeriscape removing the grass and installing rocks, special plants and redoing the sprinklers.  I had contracted this project out so one very large expense.  So can I expense it or I'm required to depreciate the project? Can I expense the project and depreciate it, this doesn't sound right.

Thank you for any help 

[AmandaR1 · Accepted solution]

First, you have to look at whether the project was an "improvement" or a "repair," which based on the information you provided, it sounds like it was a 'capital improvement.' 

Lawn care and repairs and maintenance are expensed because these costs keep the property in it's original condition. Improvements distinguish themselves because they add value to the property and must be "capitalized" and then you take depreciation. For more info on this difference, this article is providing a good summary HERE.

It sounds like you should add the landscaping project as an asset, within the rental property and take depreciation. You'll might be able to choose to take special depreciation or section 179 depreciation and deduct the amount in full (or choose to deduct it over the useful life).

[view2]

Section 179 specifically excludes personal property used in residential rental property.
Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging.
Real Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements).
Land and land improvements do not qualify as section 179 property. Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences.

 Electing the Section 179 Deduction

<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p946/ch02.html">https://www.irs.gov/publications/p946/ch02.html</a>

[annacpa58]

Never ever can you take Section 179 on Schedule E property. If removing the landscaping would cause harm to the building its 27.5 years