Roof repairs and taxes may not seem to have a lot in common. As a commercial building owner, however, you’ll want to be sure you are taking advantage of recent beneficial changes in the tax code that allow you to depreciate expenses faster. More specifically, you’ll want to understand how Section 179 and bonus depreciation can make the expense of a new roof a bit more palatable.
The 179 Deduction
Named for a section of the tax code, Section 179 enables commercial building owners to take a tax break for investments they make in their property through the purchase of new equipment or improvements to their business. This tax deduction means you can deduct these costs from your total gross income for the past tax year. Rather than depreciating costs over many years, you can deduct 100% for the year the improvements were made. While this tax deduction isn’t new, there have been recent changes that enhance the deduction. And, as professional commercial roofers, we’re excited that our customers can now take deductions for roofs, HVAC units and security and fire devices under the 179
Prior to 2018, the limit for what you could deduct was $510,000. That amount nearly doubled to $1 million for the total you spent on the combination of improvements and expense—including commercial roofing repairs. There are some restrictions for the deduction, but most improvements do qualify. Additionally, the phase-out threshold was increased from $2 million to $2.5 million.
As we have mentioned in previous blogs, the Tax Cuts and Jobs Act (TCJA) of 2017 gifted us with tremendous tax savings by accelerating the schedule under which owners of qualified property may deduct a percentage of their building’s depreciable assets, also known as bonus depreciation. A property qualifies if it has a recovery period of 20 years or less. This includes personal property and land improvements, but does not include improvements to
the building’s core.
So how does your commercial roof enter the picture? First, bonus depreciation now applies to old and new property, and it includes real estate. The TCJA includes new construction and renovations to what the IRS includes in its definition of bonus-eligible property. The TCJA set bonus depreciation at 100% for qualified property placed in service between Sept. 28, 2017 and Dec. 31, 2022. After 2022, the depreciation rates will decline gradually.
If you didn’t get around to making repairs to your commercial roof in 2019 for this year’s tax season, plan to make them this year. The Section 179 deduction can change from one year to the next, especially given that this is an election year with new policies likely to be implemented down the road. If you are looking for a commercial roofing contractor in Cleveland, Ohio and its surrounding communities, be sure to schedule an appointment now to take advantage of the tax changes.
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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