CASE STUDY OVERVIEW
Trust is imperative when it comes to business. It’s built over the course of years, or even decades, and can evolve from a simple conversation. That’s how TEMA Roofing came upon the opportunity to work with PLIDCO, a third-generation family business focused on oil and gas pipeline repair.
The second project between the two companies afforded PLIDCO the opportunity to take advantage of the IRS Section 179 tax deduction, saving them considerable money when replacing their new building’s roofing asset. With this particular IRS tax code, business owners may be able to realize significant tax savings by taking a depreciation deduction for commercial roofing.
Since 1949, PLIDCO (a leader in pipeline repair and maintenance) has manufactured hundreds of thousands of pipeline fittings – used on high-pressure or high-temperature emergency repairs worldwide. They are the only provider in the industry to offer a 5-year limited warranty and have seen so much growth that they recently found the need to move from their Westlake, Ohio office to a new, larger manufacturing facility in Strongsville, Ohio.
At over 248,000 square feet, the new facility was 200% larger than their previous space, and in making the move, the company wanted to ensure the building’s roofing asset was in top condition.
Having known Tom Froelich (owner at TEMA) through a CEO peer group, Kim Smith, president at PLIDCO, knew that TEMA Roofing was the place to turn when considering options for the Strongsville roof replacement.
With the enormity of the roofing surface, it was imperative that TEMA not only find the best commercial roofing material for the job but also deliver a strategy that could help PLIDCO save both time and money.
The PLIDCO roof project was certainly no small task! The company’s new property had an old roof that was more than 248,000 sq. ft., and they wanted to begin roofing improvements ASAP for functional business purposes.
Additionally, PLIDCO needed to establish a trusted relationship with their roofing contractor so that, moving forward, the roofing asset would be managed properly (preventative maintenance, planning for future roof repairs and keeping existing warranties intact).
Large Commercial Building Roof Replacement
When it comes to large commercial properties or business owners with multiple locations, it’s imperative to consider a design-build roofing company because it’s a tried-and-tested project delivery method. As a business owner seeking commercial roofing, you sign a single contract for the entire project, rather than several separate contracts across multiple contractors, subcontractors, architects, designers, etc.
Design-Build Roof Installation
The Design Build Institute of America (DBIA) reports that the design-build approach is “sweeping the nation” and is the “fastest-growing, most popular method used to deliver construction projects in America.”
So, what are the most significant advantages of design-build for commercial roofing projects?
- Project timelines are shortened since pre-bid meetings, contract selections, and negotiations are eliminated.
- Change orders are anticipated and discussed throughout the project (aka – a proactive approach to commercial roofing).
- Costs are reduced because there are fewer organizations involved and less back-and-forth.
In addition to keeping this particular capital expenditure cost-effective and time-efficient, PLIDCO also needed their existing roof warranties to remain intact for areas of the building where re-roofing wouldn’t be completed right away.
PLIDCO’s project required a roofing contractor that could decipher warranty documents and complete the necessary inspections and paperwork to successfully transfer the warranties from the previous building owner.
TEMA was able to provide PLIDCO with a roofing system solution that met the customer’s needs and budget while also becoming a trusted resource that could be utilized for years to come.
In fact, TEMA helped PLIDCO realize a significant tax credit by rapidly depreciating existing mechanics (like HVAC, electrical, plumbing and fire protection components) and new materials, which ended up justifying the cost of a new roof.
Section 179 Deductions for a New Roofing System
According to IRS.gov, the Tax Cuts and Jobs Acts (TCJA) lists qualified property as “tangible personal property such as machinery and equipment purchased for use in a trade or business, and if the taxpayer elects, qualified real property.” TCJA then amended the code to include “improvements to nonresidential real property, such as roofs; heating, ventilation and air-conditioning property; fire protection and alarm systems; and security systems. Revenue Procedure 2019-08 explains how taxpayers can elect to treat qualified real property as Section 179 property.”
Qualifying Commercial Roof Tax Deductions/Write-Offs
Section179.org states that all businesses that purchase, finance, and/or lease new or used business equipment during tax year 2022 should qualify for the Section 179 Deduction (assuming they spend less than $3,780,000).
*For the current tax year, bonus depreciation is being offered (some years it is not) and includes both new and used equipment (as long as the used equipment is new to the tax-deduction-filing company). This bonus depreciation is helpful for companies spending a large amount of money (more than the current spending cap).
Deduction Limits to the Tax Code
Section 179 deductions must be used for business purposes more than 50% of the time. In 2021, when the PLIDCO roofing project took place, the full deduction limit was $1,050,000 (and was good until the tax-filing company reached $2.62 million in purchases). The intended purpose of this deduction was for small/medium businesses to be able to invest in themselves.
*TEMA Roofing is happy to discuss this program with your business and suggests notifying your tax professional if you are interested in utilizing this particular tax law for upcoming roofing projects.
Roof Maintenance, Management and Inspection
Planning for the future upkeep of a new commercial roof is key to establishing a trusted working relationship between customer and contractor – and that’s why TEMA’s Roof Asset Management program plays such a vital role in long-standing customer satisfaction.
The Roof Asset Management program (and cloud-based client portal) allows customers to stay connected with TEMA while having immediate access to all commercial roofing information for the company’s personal business use (including images, documents, warranties and all repair/replacement/installation information).
Keeping Existing Commercial Roof Warranties Intact
TEMA’s client portal tracks everything that a client needs to know when it comes to their roof(s). Not only is general roofing system information stored in the cloud, but all documentation pertaining to service calls and repairs is also available, too.
This means that maintaining roofing system warranties is as simple as clicking a button. And, since performing preventative maintenance is often a condition for keeping a roof warranty intact, it’s imperative that businesses keep accurate, comprehensive documentation of any work or inspection that has been completed.
TEMA was able to work in tandem with PLIDCO so that the existing roof warranties were transferred over to PLIDCO once the company took possession of the new manufacturing facility.
TEMA Roofing is proud of its trusted partnership with PLIDCO and was able to install a massive new roofing system while also serving as a resource for the client. Plans were established for preventative maintenance moving forward, and PLIDCO was able to realize significant tax savings through the Section 179 tax deduction for the new roof.
Location: Strongsville, OH
Date: Completed in September 2021
Existing Roof: Upper Roof – EDPM, Lower Roof – Coated EPDM
Material Used: EPDM 60 MIL
Coverage: Upper Roof – 907,000 sq.ft., Lower Roof – 307,000 sq.ft.
Solution: Upper Roof – Tear-off Roof Replacement, Lower Roof – Roof Overlay