Owning a rental property can be a rewarding investment, but it also comes with its fair share of expenses. One common question among landlords is whether they can deduct the cost of a lawn mower on their taxes. The answer, unfortunately, isn’t a simple yes or no. This article will delve into the intricacies of deducting lawn mower expenses, exploring the IRS rules and regulations, and offering guidance to help you navigate this complex issue.
In short, deducting a lawn mower for rental property depends on several factors, including the specific type of mower, how it’s used, and whether it’s considered a capital expense or a repair. Let’s break down the key considerations.
Understanding Deductible Expenses for Rental Properties
The IRS allows landlords to deduct certain expenses related to their rental properties, including:
- Interest: Mortgage interest payments on the property.
- Taxes: Property taxes assessed on the rental.
- Insurance: Premiums for property insurance.
- Repairs and Maintenance: Costs associated with fixing or maintaining the property.
- Depreciation: A deduction for the decline in value of the property over time.
However, not all expenses are deductible. The IRS classifies expenses into two categories: ordinary and necessary expenses and capital expenditures.
The Difference Between Ordinary Expenses and Capital Expenditures
Ordinary and necessary expenses are those incurred in the day-to-day operation of the rental property. These expenses are typically deductible in the year they are incurred. Examples include:
- Repairing a leaky faucet
- Replacing a broken window
- Paying for landscaping services
- Purchasing cleaning supplies
Capital expenditures are expenses incurred to improve the property’s value or extend its useful life. These expenses are generally not deductible in the year they are incurred. Instead, they are depreciated over the life of the improvement. Examples include:
- Adding a new room to the property
- Installing a new roof
- Building a swimming pool
Where Does a Lawn Mower Fit In?
Here’s where the question of deductibility gets tricky. A lawn mower can be considered either an ordinary expense or a capital expenditure, depending on several factors:
1. Type of Lawn Mower:
- Standard Push Mower: This is typically considered an ordinary expense, as it’s a relatively inexpensive tool used for routine lawn maintenance.
- Riding Mower: This can be considered a capital expenditure, especially if it’s a substantial investment with a long lifespan.
2. Purpose of Use:
- Maintaining the Rental Property: A lawn mower used exclusively for maintaining the rental property is more likely to be considered deductible.
- Personal Use: A lawn mower used for both personal and rental property maintenance can complicate the deductibility.
3. Cost:
- Low-Cost Mower: If the lawn mower is a small, inexpensive purchase, it’s likely to be considered an ordinary expense.
- High-Cost Mower: A high-cost lawn mower, especially if it has a long lifespan, is more likely to be treated as a capital expenditure.
4. Frequency of Use:
- One-Time Purchase: A lawn mower purchased to replace an old one is likely to be considered an ordinary expense.
- Regular Replacements: If you regularly replace lawn mowers, it might raise questions about whether the expenses are truly ordinary or if they represent a recurring capital investment.
Documenting Expenses
No matter how you classify a lawn mower expense, it’s essential to maintain proper documentation. This includes:
- Purchase Receipts: Keep all receipts for lawn mower purchases.
- Maintenance Records: Track any repairs or maintenance performed on the mower.
- Usage Logs: Maintain a log of how the mower is used and for what purpose.
Seeking Professional Advice
The rules surrounding deductibility are complex, and the IRS offers specific guidance on these matters. If you’re unsure whether you can deduct a lawn mower expense, it’s always a good idea to consult with a tax professional or accountant. They can help you navigate the rules and ensure that you’re claiming the appropriate deductions.
Conclusion
Deducting a lawn mower expense for rental property is a complex issue that requires careful consideration. While small, basic lawn mowers used exclusively for the rental property are more likely to be considered ordinary expenses, larger, more expensive, or frequently replaced mowers may be classified as capital expenditures. By understanding the differences between ordinary expenses and capital expenditures and maintaining proper documentation, you can ensure that you’re claiming the right deductions and maximizing your tax savings.
Frequently Asked Questions
Can I deduct a lawn mower for my rental property if I only use it for that property?
Yes, you can deduct a lawn mower if it is used exclusively for your rental property. This falls under the category of “ordinary and necessary” expenses for maintaining your rental property. The Internal Revenue Service (IRS) allows you to deduct expenses that are directly related to generating income from your rental property.
However, you must use the depreciation method for deducting the cost of the lawn mower over its useful life. You cannot deduct the entire cost of the lawn mower in one year.
Can I deduct a lawn mower if I use it for both my rental property and my personal residence?
No, you cannot deduct the full cost of a lawn mower if you use it for both your rental property and your personal residence. The IRS does not allow deductions for personal expenses, and using a lawn mower for your personal residence would be considered a personal expense.
However, you can deduct a portion of the lawn mower’s cost based on the percentage of time it is used for your rental property. You’ll need to track the usage of the lawn mower and determine the percentage of time it’s used for the rental property.
What if I use the lawn mower for other rental properties?
If you use the lawn mower for multiple rental properties, you can deduct the entire cost of the lawn mower, but you must depreciate the cost over its useful life.
You can deduct a portion of the depreciation expense for each rental property based on the percentage of time the lawn mower is used for each property. You will need to maintain records showing the usage of the lawn mower for each rental property.
What about the cost of gas and oil for the lawn mower?
Yes, you can deduct the cost of gas and oil used for the lawn mower if it is used exclusively for your rental property. These expenses are considered “ordinary and necessary” expenses for maintaining the property.
You can deduct these expenses as they are incurred, meaning you can deduct them on your tax return for the year the expenses were paid.
What documentation do I need to keep?
To support your deduction, you should keep records of all expenses related to the lawn mower, including the purchase price, date of purchase, and all maintenance costs. You should also keep track of the usage of the lawn mower, especially if you use it for both personal and rental purposes.
If you are using the lawn mower for multiple rental properties, you should keep separate records for each property. This will make it easier to calculate the portion of the depreciation expense that can be deducted for each property.
What if I use a lawn care company?
If you hire a lawn care company to maintain your rental property, you can deduct the cost of their services. This is another way to ensure that your rental property is properly maintained, which is essential for attracting tenants and maintaining the value of your investment.
Be sure to keep invoices and receipts for all lawn care services, as this documentation will be required when you file your taxes.
What if I buy a new lawn mower every year?
If you buy a new lawn mower every year, you can still deduct the cost of the lawn mower, but you must depreciate it over its useful life. The IRS does not allow you to deduct the entire cost of the lawn mower in one year.
However, you may consider renting a lawn mower instead of purchasing a new one each year. This could save you money on the upfront cost and potentially lower your tax liability.