Getting depressed from all the negative news about the construction business these past couple of years? Here's a bit of good news: Certain landscaping projects could help you lower your tax burden substantially.

The Domestic Production Activities Deduction (IRS Form 8903) allows certain businesses to deduct 6% of net income derived from qualified "production" activities, including the construction of real property performed in the United States.

What Qualifies?
"The Domestic Production Activities Deduction is very specific," says Michael Napolitano, a CPA with the firm Citrin Cooperman & Company. Napolitano works with several landscape contractors ranging from $500,000 to $18 million in annual revenue, many of whom have been able to benefit from this deduction.

Landscape installations that are part of either new construction projects or substantial property renovations could be eligible. The key wording, Napolitano points out, is "structural components."

"If there's a development taking place, whether it's a commercial building or a home, a landscaper's installation work qualifies for the deduction because it's part of a much larger project: the 'production' of a new structure," Napolitano explains. While this would include the installation of an irrigation system, ongoing maintenance and lawn care services would not qualify.