Are commercial roof repairs tax deductible? Sounds like an easy question, right? Your commercial roofer is not the same as your tax accountants, but commercial roofers do have one tax tip which could save you a lot of money.
A portion of the revised tax code, Section 179, allows businesses to deduct the full purchase price of qualifying equipment, software, and qualified investments like maintenance and improvements purchased or financed during the tax year.
This deduction is substantial, as described by the IRS:
For tax years beginning in 2020, the maximum section 179 expense deduction is $1,040,000 ($1,075,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,590,000.
A full roof replacement, substantial investment in roof improvements, or additional rooftop equipment all qualify for this Section 179 deduction.
As if written for commercial property owners and their roofing partners, here is the IRS’s own wording again:
Any of the following improvements to nonresidential real property placed in service after the date the nonresidential real property was first placed in service.
2. Heating, ventilation, and air-conditioning property.
3. Fire protection and alarm systems.
4. Security systems
The work your local, helpful commercial roofer performs must be an investment or enhancement to your commercial property.
In the past, repairs and maintenance projects to enhance a property, restore it to working condition, or adapt it to a new use were considered capital expenses and were subject to depreciation. Under the old tax rules, for example, a roof coating was a maintenance expenditure, while a roof replacement was considered a capital expense.
Generally, with the Tax Cuts and Jobs Act’s new regulations, your business can deduct the full cost of investments such as roof maintenance, and improvements to roofing and HVAC.
Save the Papers!
Your tax accountants will be very appreciative if you retain every invoice, estimate, bill, and contract connected to upkeep, maintenance, and improvement of your facilities.
You need not be a tax expert; just save the papers and provide all the information to your accountants to let them determine what meets the Section 179 regulations. Please consult with your tax accountant or attorney regarding the specifics of your commercial property’s depreciation and deductibility. For expert commercial roofing services, please consult us at PSI Roofing. Contact us today.