Are you wondering if you can expense a new roof on a commercial property? The answer is yes.
Cost is still a factor, but if you need a new roof and you are undecided on a course of action, the fact that the cost is deductible is something to keep in mind when introducing the idea to your team or family.
Look into section 179.
Section 179 of the Internal Revenue Service (IRS) code allows businesses to deduct the cost in the year the roof is installed rather than depreciating it over several years.
Section 179 covers a range of improvements, like security systems and ventilation — but today, we’re zeroing in on roofs.
The deduction was first introduced as part of the Revenue Act of 1958, but it’s gone through several updates since then, most significantly with the Tax Cuts and Jobs Act of 2017. Many of those changes are still in effect in 2024.
The deduction takes the value of the roof off of your taxable income.
Section 179 deductions offer tax savings the year a roof is installed, helping you offset the upfront cost right away.
A deduction reduces your taxable income, lowering the amount of income that can be taxed. That’s different from a tax credit, such as the credit for energy-efficient roofing for homeowners. Credits are dollar-for-dollar payments that directly reduce tax liability.
When we’re talking about expensing the cost of a roof, it’s a deduction.
There are four requirements for eligibility.
Here’s what makes you eligible to expense a new roof for your commercial properties. Some of the criteria can be tricky, so stay with us.
1. The roof must be used for business purposes.
The property where the roof is installed must be used for business purposes more than 50% of the time. So, some personal use is okay, but it’s got to be less than half the time.
2. It needs to be on a non-residential property.
Qualifying properties include offices, warehouses, and retail spaces, so it’s not an option for homeowners.
3. It needs to be a replacement.
Repairs to your roof don’t qualify. It must be a replacement.
If damage is the reason for replacement, remember that insurance covers roof replacement for homeowners and commercial properties.
4. It must be purchased in the current year.
The roof has to be purchased in the tax year the deduction is claimed. If you ease or rent the property, you will not qualify for the deduction.
The deduction is geared toward small businesses.
There’s no actual limit to the size of your business, but there is a deduction limit. That means it’s mostly small businesses that will take advantage. For 2024, the deduction limit is $1,220,000.
Get a quote from a contractor.
The first thing you want to do when planning a new roof is go to a contractor. A good contractor will offer to come out to your property and give you a free quote.
You can use this quote to both see the cost of the project and help confirm that the roof is eligible for a deduction under Section 179.
Also, be sure to ask the contractor for a breakdown of materials and labor. That’ll help with the tax filing process and maximize your deduction.
Remember — even though a roof can be expensed, that doesn’t mean you should overpay.
Then, talk to your tax professional or CPA.
Once you have the contractor’s quote, consult with your tax professional or CPA to be absolutely sure the roof qualifies for the deduction.
Tax stuff is complicated. Just like you’ll want an expert to come in and build your roof, you should consult with a tax pro to understand all the implications of the deductions and ensure you’re in compliance.
Get started on a tax-deductible roof replacement today.
Here’s what we offer:
- Free inspections and quotes
- Itemized quote and proposal
- Expert craftsmanship and quality materials
Get a free quote today.
– Carlos Rivero, Owner & Operator
Juno Construction Group, LLC
