When a tree falls on your rental property, it doesn’t just make a sound—it can create a significant dilemma and potentially become a sizable unplanned expense. 

Whether cleaning up the aftermath of a storm or clearing a hazardous tree that threatens your property and tenants’ safety, can you write off the cost of tree removal as a tax deduction?

In this article, we’ll explain when tree removal is and isn’t a deductible expense and how to claim this deduction. Knowing when and how this expense qualifies for a deduction can help you save money and remain compliant with IRS regulations while keeping your rental property in great shape.

When is tree removal a tax-deductible expense for rental property?

Understanding the difference between an improvement and a repair is key when claiming tree removal as a tax deduction.

Improvements add value to your property and must be capitalized. Repairs are necessary for maintaining your property’s current condition, meaning you can deduct them as expenses in the year they occur.

Tree removal falls under the necessary repairs and maintenance category when it directly contributes to preserving your property’s condition or ensuring tenant safety.

Here are some examples of when tree removal is a tax-deductible expense for your rental property:

• Removing a dead or diseased tree that poses a risk to structures or tenants
• Cutting down a tree damaged by a storm to prevent further damage
• Eliminating a tree whose roots are causing structural damage to driveways, sidewalks, or foundations
• Clearing trees that obstruct essential utilities like water lines or electrical wires
• Removing trees to comply with local safety ordinances or regulations

When is tree removal not tax deductible?

Tree removal is not immediately deductible when it falls under the category of capital improvements. Capital improvements must be added to your cost basis and depreciated over time. As a result, they don’t qualify as immediate deductions in the year you incur the expense.

Some instances when you might need to capitalize tree removal expenses include:

• Removing trees as part of a larger landscaping project aimed at enhancing the property’s aesthetics
• Clearing trees to create space for new construction or additions to the property
• Removing trees to install new amenities like a pool, garden, or patio

Typically, the expense is non-deductible if you remove trees from property areas not used for rental purposes, such as your personal yard if you live on the same property.

Other common landscape tax deductions for rental property

In addition to tree removal, you can usually claim additional landscape tax deductions to reduce your taxable net income. These deductions can help maximize the financial benefits of owning a rental property while helping it remain attractive and safe for current and future tenants:

• Routine landscaping: Tasks like grass cutting, weeding, and mulching can maintain your property’s condition and appeal.
• Seasonal maintenance: You can deduct activities like snow removal, leaf raking, and seasonal planting since they can keep your property safe and functional throughout the year.
• Repairing storm damage: Expenses related to replacing plants or trees damaged by storms are deductible, helping restore your property’s original condition.
• Pest control: Pest control services aimed at maintaining the landscape, such as treating lawns for insects, help ensure a safe environment for your tenants.
• Irrigation system repairs: Expenses related to repairing or maintaining your property’s irrigation system, including fixing sprinklers and replacing pipes, are deductible to maintain landscape health.

How to claim a rental property tax deduction for tree removal

Claiming tax deductions for rental property is easy if you follow a few simple steps.

Understand IRS guidelines

The IRS has specific guidelines on what qualifies as deductible expenses for rental properties. If you intend to deduct the full amount in the year incurred, be sure your tree removal expense is directly related to the upkeep and maintenance of your rental property rather than something that would qualify more as a capital improvement. Familiarize yourself with IRS Publication 527, which offers detailed information on rental property tax deductions.

Use the correct forms and schedules

Most rental property owners use Schedule E (Form 1040) to report rental income and expenses. Ensure you accurately categorize your tree removal expenses under “Other” or “Repairs and Maintenance” as appropriate.

Maintain accurate records

Save receipts, invoices, and any other documentation related to the tree removal service. Also, keep a detailed log of the date and reason for the tree removal and any correspondence with contractors. Good recordkeeping helps you remain compliant with IRS regulations and can assist you in the event of an audit.

Start managing your rental property with ease

Claiming tax deductions for tree removal and other landscape expenses is just one step you can take toward optimizing your rental property’s potential. Using Stessa can help you take your property finances even further. 

Stessa makes tracking your income, expenses, and deductions simple, helping to ensure you’re always organized and ready for tax time. With features like automated accounting, tenant screening, and rent collection, you can eliminate hours of busywork and focus on growing your investment instead.

Join over 200,000 landlords who are streamlining their property management operations with Stessa. Sign up for free today!