There’s never been a better time to replace your roof, because in 2021, tax code Section 179 was updated to have an even better tax deduction for commercial building owners.
Since commercial roofs typically have a large square foot coverage area, the cost of a full roof replacement for commercial buildings can get steep (which leads to many building owners putting off when they need a new roof). But, procrastinating on roof replacement can cause additional problems that compromise the integrity of your entire building!
Sure, repairing damage and performing preventative maintenance on your roof helps prolong its lifespan, but all roofs will need to be replaced eventually. As of 2021, this became a lot more affordable for business owners with an extended tax code adding improvements to commercial roofing to the qualified list.
What Qualifies for the Commercial Roof Tax Write Off?
Any repair or upgrade to your business can be completely written off under the revised tax law. Almost all commercial buildings qualify under this tax code, including office spaces, retail shops, industrial or warehouse infrastructure, and apartment buildings.
Improvements to commercial buildings are included to receive the deduction within this tax act, which includes the write off of roof replacements performed in the same year as the deduction… and there is no size qualifier – buildings can be big or small.
And, while your commercial building roof replacement counts for the tax deduction, it doesn’t stop there! Some additional building upgrades that are included in Section 179 upgrades include the following:
- New equipment
- Office furniture
- Property additions
- Purchases or leases
- Computers and software
- Security systems and alarm systems
- Heating, ventilation, and air conditioning systems (HVAC)
- Anything that adds value to your commercial property!
Can I Save on Roof Repairs, Too?
Not ready to fully replace your roofing system yet? No problem.
You can still benefit from IRS tax deductions for roof repair (but there may be additional limits and timing restrictions, so be sure to review options with a well-versed commercial roofing professional). Roof maintenance and repair is technically “improving upon your business and commercial building,” so you can often write off these expenses, as well. And, since roofing project costs add up quickly, these tax deductions make improving your commercial building even more affordable.
At TEMA Roofing Services, we are big believers in commercial roof restoration, when appropriate! It can save money on not having to obtain an entirely new roof, especially when your roofing system has useful service life left.
How Much Money Can I Save?
Even with a sizable tax deduction, roof replacement for large commercial buildings is a costly (but ultimately necessary) improvement and should be planned for in advance. To ensure all your expenses are in order, it is important to discuss repair costs with your tax professional.
Thanks to the recent Tax Cuts and Jobs Act, business owners can deduct up to $1 million on their income tax, which is twice the amount originally granted back in 2017. Expensing the total amount during that tax year gives you this money back quickly instead of waiting for depreciation of the property. Be sure to include the entire cost of the equipment and repairs that qualify for the deduction. In some cases, it may actually save you money to buy new equipment than lease due to this write off. When making your financial plan, see how Section 179 can save you more.
Another good way to save money on your roofing system is to incorporate constant proactive commercial roof maintenance. Annual inspections and small repairs on your roof will ultimately extend the lifespan of your roof and save you from a costly roof replacement. Plus, it will help to maintain any warranties that may be in place for your existing roofing materials.
Are There Any Limits to the Tax Credit?
It is important to note that there are certain limitations of the tax code.
If the taxpayer pays more than $2 million in a given tax year, the Section 179 deduction is reduced by the amount exceeding the $1,050,000 phase-out threshold. Any advancements or equipment must have been purchased during that tax year, as well.
Finally, the deduction amount cannot be more than the total taxable income for the business during that tax year.
When Should I Replace My Commercial Roof?
Deciding to go forward with a full roof replacement is no small decision, due to the amount of money that goes into re-roofing (depending on the size of your building). However, this tax law might save you enough to stop holding off!
There are many warning signs that your roof is beyond reasonable repair and that full replacement is necessary. Some common signs include the following:
- Strange odors within your commercial property
- Sagging spots on flat roof systems
- Signs of damage
- Water pooling and leaks
Annual roof inspections and roofing repairs from a trusted roofing contractor can help delay the need for a full roof replacement. When you inspect regularly, you discover and are able to repair small problem areas before they cause larger issues. The longer leaks are left untreated, the more damage is done to the entire roofing system.
When repairs become increasingly more frequent, it may be time for a full replacement. While regular repairs and inspections are a great way to get the most out of your roof (and extend its longevity), at some point, it becomes more cost-effective to replace the entire roof. And now, with this updated IRS tax code, it’s even easier for business owners to find the money to invest in their buildings.
Who Should I Call to Replace My Roof?
It’s imperative to utilize a qualified, experienced roofing company for commercial roofing improvement needs, because an improperly installed or repaired roof will be more of a headache than a help!
An inexperienced contractor won’t have knowledge of many important facets of the business: tax deductible commercial roofing expenses, the process of maintaining roof manufacturer warranties, or when/if the benefits of full replacement outweigh repairs and restoration.
When you’re ready to work with the best of the best when it comes to your roofing system, TEMA Roofing Services is here to help! Contact us today to get started.