If your commercial property looks tired and outdated, it can detract from its overall image. It also can make your employees, tenants and customers uncomfortable. To elevate your property, it may be time to invest in some larger-scale landscaping projects. These renovations could be considered capital improvements, which can help you recoup costs and boost your commercial site’s value.

Landscaping work generally takes place in a sequence that starts in spring, with preparation of flower beds and planting of annual and perennial flowers and trees. The summer construction season is when large hardscaping projects and major reshaping of the landscape are completed, while fall is a good time to plant shrubs and bushes. Then, the following spring is when these plants thrive and are ready for regular maintenance.

To qualify as a capital improvement, a landscaping project must substantially add to the value of real estate or appreciably prolong its useful life. It should also be a permanent addition to the property rather than just a repair or ordinary replacement. An experienced tax professional can assist you in determining whether or not a given landscaping project qualifies as a capital improvement.

Many different types of commercial landscaping can qualify as a capital improvement, depending on the nature of the work and its long-term impact. For example, replacing cracked concrete walkways with pavers improves the aesthetic of a commercial property and could increase usable space for employees or tenants. Similarly, replacing an old, worn-out and unattractive lawn with new sod or a series of small terraces makes a commercial property more inviting for customers and clients.

A well-designed and maintained landscape can reduce maintenance costs by reducing the need for regular pruning, watering, fertilizer use and removal of debris from storms. It can also cut energy usage by limiting the amount of time and effort required to water the yard. Choosing low-maintenance and environmentally friendly plants and trees, such as those that are native to the region, can further lower landscaping maintenance needs.

In addition to deciding if a particular landscaping project is a capital improvement, you should determine whether sales tax applies to the materials used in the renovation. Typically, sales tax is charged on most landscaping materials, including mulch, gravel, soil and bark. However, if the landscaping work is considered a capital improvement and the customer provides a properly completed Form ST-124, Certificate of Capital Improvement, the landscaper should not charge sales tax for the project. The landscaper should keep a copy of this form in his records to protect himself from liability for sales tax if later audited. capital landscaping