Professional assistance recommended to value landscape losses on taxes
RICKY THOMPSON

Ricky Thompson is the Jasper County exension agent. For more information, call 384-3721.

When it comes to acceptable methods for valuing landscape tree loss for federal income tax deductions, there are hardly any definitive rules and criteria available from the Internal Revenue Sservice. Analysis and appraisal of landscaping in real estate is complex and requires professional training and experience. The best a taxpayer can do is to work with a professional real estate appraisers and professional arborist, and diligently document the value determined.

The income tax law for a casualty loss deduction requires that the amount of deduction is limited to the smaller of (1) the decrease in fair market value (FMV) before and after the storm, or (2) the adjusted basis of your property. Salvage sale further reduces the deductions allowed.

If your landscape trees have zero basis, there is no need to hire a professional appraiser since there will be no casualty loss deduction in that case. Also, if salvage sale income exceeds the adjusted basis, there will be no need to hire professional appraisers since you have a taxable casualty gain instead of a loss.

The IRS guidelines say the cost of restoring landscaping to original condition after a casualty may indicate the decrease in FMV. You may be able to measure your loss by what you spend on the following: tRemoving destroyed or damaged trees and shrubs, minus any salvage you receive tPruning and other measures taken to preserve damaged trees and shrubs tReplanting necessary to restore the property to its approximate value before the casualty.

The problem with the cost of restoration/replacement/ repair is that this approach can be practically impossible. For example, the cost of replacing a 60-year-old hardwood tree is difficult to estimate, if not impossible. Due to practical reasons, a competent professional appraisal is frequently used in establishing the value of landscape trees for tax purpose.

The Market Approach (comparable sales) used by professional arborists more closely follows the IRS criteria. However, the comparable sale method is difficult to use when nearby property was also damaged by a storm. The Guide cautions that "the Market Approach should be coordinated with qualified, licensed real-estate appraisers."

A real-estate appraiser as well as professional arborists may be necessary. Trees and shrubs on a residential property that are destroyed must be appraised together with the real estate. Business property must separately value the trees and the building. To find professional arborists, go to: www.ascaconsultants. org