Section 179 of the IRS Tax Code for Roofing Improvements to Commercial Buildings
Putting a new roof on a commercial building is a large expense for most businesses. It often requires advance planning and budgeting. However, changes in the tax law, allowing owners to expense a new commercial roof in a single year might make installing a new commercial roof less of a financial burden for businesses.
The Tax Cuts and Jobs Act approved by Congress in December 2017, under section 179, allows building owners to deduct the full costs of a roof replacement up to $1 million in the year it’s completed. Prior to the December 2017 changes, the cost of the roof replacement was depreciated over 39 years.
If your building or facility needs a new roof then the one-time deduction might make it affordable. Be sure to check with your tax professional for advice.
The National Roofing Contractors Association Statement on Section 179
The Roofing Contractors Association (NRCA) applauded the new tax law’s expensing rules for roofs. The following are some of their statements:
NRCA is pleased the Tax Cuts and Jobs Act expands the definition of qualified real property eligible for full expensing under Section 179 of the tax code to include improvements to nonresidential roofs. Section 179 allows certain taxpayers to immediately expense the cost of qualifying property rather than recovering such costs over multiple years through depreciation. The Tax Cuts and Jobs Act significantly expands the expensing limits under Section 179 with the maximum amount a business may expense now set at $1 million and the phase-out threshold increasing to $2.5 million. These new limits are effective for properties placed in service in taxable years beginning after Dec. 31, 2017, and the amounts will be indexed for inflation starting in 2019.
In addition to expanding the amounts that may be expensed, the Tax Cuts and Jobs Act expands the definition of qualified real property eligible for section 179. As of January 1st, qualifying property for Section 179 includes ‘improvements to non-residential real property placed in service after the date such property was first placed in service: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems’. Given these changes to Section 179 by the Tax Cuts and Jobs Act, qualifying taxpayers (generally small and mid-sized businesses) may now elect to fully expense the cost of any improvements to nonresidential roofs beginning in 2018 and future years. Essentially, any improvements to nonresidential roofs, including full re-roofs of existing buildings, now may be expensed in the year of purchase by any taxpayer eligible to deduct expenses under Section 179.
More Information on Commercial Roofing and the Tax Code
Read more of NRCA’s response to the new expensing rules for roofs.
Find out how the Internal Revenue Code Section 179 was the impetus for one of our clients, the owner of a 65,000-square-foot industrial building housing a light manufacturing company in the San Francisco Bay Area, to install a new roof.
Contact us for more information on replacing or repairing your building’s roof.