If you’ve been postponing an upgrade to your commercial roof, now is the time to act! The new Section 179 provisions of the Tax Cuts and Jobs Act provide the perfect opportunity to upgrade your commercial roof, as new roofing investments are tax-deductible under the tax code.
Most Business Equipment Qualifies for Section 179
In fact, most business equipment your company buys will qualify for the deduction.
We’ve asked our partners at Fricke and Associates, P.C. to provide us with additional information regarding Section 179 and commercial roofing upgrades.
“A business can deduct up to $1,000,000 under Section 179 including replacement of a roof. In addition, which you usually don’t see in the explanation of replacing a roof is that if the old roof is not 100% depreciated, they can also write off the remaining cost of the old roof. As an example: the business is depreciating a $200,000 roof over 39 years and must replace it after 20 years after taking about $100,000 in prior depreciation deductions, then they can deduct the remaining $100,000 plus 100% of the cost of the new roof. This usually works out best where they have had a cost segregation study performed and have broken out the cost of the old roof as a separate component.” -Ted Fricke, CPA (Fricke & Associates, P.C)
Qualifications for Commercial Roofing
According to the IRS, property that qualifies for the deduction includes “improvements to nonresidential 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.” This means re-roofing projects and roof replacements also qualify.
The Section 179 tax deduction is available to building owners of:
- Retail buildings
- Office buildings
- Industrial buildings
- Apartment buildings (at least 4 stories)
- Industrial warehouses
How to Obtain the Section 179 Deduction
First, you must purchase your roof (new, upgraded, or restored) and put it into service the same year you want to take the deduction. Then, consult your tax professional to complete the IRS form 4562 to elect the deduction.
Be sure to have all the following information for the form: date of purchase, date, you started using the property, and all costs associated with the purchase (receipts, invoices). The deduction is equal to the total cost of all the property improvements or installations, up to $1 million.
Act Now to save on your commercial roof!
Equipment and roofing systems must be purchased and put into use between January 1st and December 31st, 2020 to qualify for 2020 tax deductions.
Parsons Roofing Company strives to provide excellent service and serve each client as a consultant, providing the best information and options available for all commercial roofing needs. Contact the Parsons team today.
If you’re looking for a qualified tax and accounting expert to assist you with obtaining the maximum deduction, reach out to Fricke and Associates, P.C.