If you get a new fence installed at a home that is used purely as your primary residence, you won’t be able to deduct the cost on your taxes for that same tax year. However, that doesn’t mean you won’t benefit from the investment.
By installing a new fence, you increase the “tax basis” of your property. Your tax basis includes the amount you’ve invested in your property over time. This means, if you were to sell that property, you’d be able to deduct the cost of your home improvements in order to lower the amount that you’re subject to pay in taxes after the sale, as your total profit would be lower.
Here’s an example: You bought your home for “$300,000” and then spent “$50,000” on various home improvements – including installing a new fence. You then sell your home for “$400,000.” Rather than paying taxes on the full “$400,000” sale price, you can deduct the tax basis (the original cost of your home + the cost of the home improvements you invested in.) “$400,000” minus a tax basis of “$350,000” leaves you with just “$50,000” profit subject to tax.
For this reason, you can think of installing a new fence at your home as a long-term investment because it can help you save money down the line.
