The Internal Revenue Service allows taxpayers to count various expenses they incur as tax deductions, using them to lower their income tax burdens. However, while you may claim deductions for some expenses immediately after they occur, you must gradually deduct expenses related to capital expenditures as they lose value from year to year. This depreciation model applies to investments in landscape improvements. You may lower your tax burden by subtracting a portion of the cost for such investments each year for several years.
Calculate the total costs of improvements you have made to your land. Use receipts and invoices as a basis for these calculations. Your total costs may include costs for work done on roads, walkways, sprinkler systems, swimming pools and light fixtures. It may also apply to things like the planting of trees and soil relocation.
Determine the salvage value of the improvement. The salvage value would be what you could get for it if you were were to remove it from your property and try to sell it. For instance, items such as light fixtures may have salvage values, while sidewalks may have no salvage value.
Determine the useful life of the item. The useful life is the amount of years you may use it before it becomes necessary to remove or replace it due to damage or normal wear. For instance, you may project that the useful life for a sidewalk is 20 years.
Subtract the salvage value of your improvement from its total cost. Divide this number by the number of years in the land improvement's useful life.
Report the depreciated value of your land improvement on your tax return every year for the duration of its useful life.