3 Income Tax Changes That Make Roof Replacement More Affordable
As a commercial building owner, you might be surprised to learn that some capital improvements to your building are more affordable under the current tax code. Over the past five years, three changes in federal tax rules actually work in your favor when it’s time to replace your flat roof.
The first tax law change occurred in 2014, when the IRS determined that replacing the outermost part of a roof is a current year expense. The IRS specifically stated that a flat roof membrane is actually a deductible repair rather than a cost that taxpayers needed to capitalize and depreciate. This approach should also apply to other replaced outer layer materials, such as shingles on a peaked roof.
However, what if your roof project includes more than just replacing the outer layer? Since 2014, if your new roof has to be capitalized and depreciated for tax purposes, the IRS allows taxpayers to write off both the old roof that was removed (and is sitting on the taxpayer’s depreciation schedule), along with the demolition costs to remove the old roof. This tax law change can save commercial building owners significant costs.
The most recent major tax reform added another advantage for building owners who want to replace their roofs. Effective in 2018, the tax laws changed so that commercial property owners may potentially expense up to $1 million of a replacement roof under Section 179, rather than having to write off the new roof under the traditional depreciation rules. (As a reminder, Section 179 of the U.S. Internal Revenue Code permits taxpayers to deduct specific types of property as an expense instead of requiring it to be capitalized and depreciated.)
While there are specific requirements that need to be satisfied to take advantage of Section 179, some taxpayers have taken the $1M deduction, written off their old replaced roof and benefited from the new law regarding the costs to remove the old roof. In other words, you can think of this as a “triple tax dip” that is perfectly acceptable by the IRS!
At Roberts Roofing, we follow these changes and keep our clients informed. However, please keep in mind that the information above is general tax information. You should always discuss your particular building improvement costs with your tax advisor.
Roberts Roofing Company has been a leading provider of innovative commercial and industrial roofing solutions in Cleveland, Ohio since 1981. We provide commercial repair, replacement and maintenance to serve companies of all sizes in Ohio and the surrounding region, offering a combination of technical expertise, custom solutions and quality workmanship for every project.
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