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How Section 179 Tax Changes Can Provide an Opportunity to Repair Your Roof

Tax law that allows building owners to expense a new commercial roof in one year

 What is Section 179

Section 179 is located in the IRS tax code. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. Specific to roofing, Section 179 will allow you to deduct any amount of money you spend on roof replacement, repair, or maintenance.

section 179 deduction 638x319 1In order to put a new roof on a commercial building, it takes planning and budgeting as it is a large expense for most businesses. A new roof is time consuming, expensive, and interestingly enough, took an eternity to depreciate and write off as a tax benefit. That is, until now. According to an article by Fidelity Roof, “The Tax Cuts and Jobs Act approved by Congress in December 2017, under section 179, allows building owners to deduct the full costs of a roof replacement up to $1 million in the year it’s completed. Prior to the December 2017 changes, the cost of the roof replacement was depreciated over 39 years.”

Section 179 now can not only help with the financial burden of installing a new commercial roof. This one-time deduction will help to make it affordable to replace, repair, and maintain your roof

How Much Can You Save?

There are seven different tax brackets for commercial businesses. They range from 10% to 37%. Check with your tax advisor to see what tax bracket you fall into. With  Section 179, you can reduce your total tax burden by whatever amount you choose to spend on commercial roofing projects while the program remains in effect.

December 31 2020

Project Timeline

It is important to get any commercial roofing project done by December 31, 2020. The incentive only lasts through the end of the year. It is unsure if the IRS will extend these incentives, so take advantage of it while you can.

What the National Roofing Contractors Association has to say

“On Sept. 21, the Department of Treasury released final regulations implementing the 100% additional first year depreciation deduction authorized by the Tax Cuts and Jobs Act of 2017 that allows businesses to write off the cost of most depreciable assets in the year they are placed in service.

December 31 2020 1This deduction generally applies to depreciable assets with a recovery period of 20 years or less, such as machinery, computers, equipment, furniture and appliances. Qualifying property must be acquired and placed in service after Sept. 27, 2017. These final regulations clarify requirements for properties to qualify, including used property and outlined rules for consolidated groups and for components acquired or self-constructed after Sept 27, 2017, and for large self-constructed property on which production began before Sept. 28, 2017.”

Final Thoughts

Take advantage of this program before it is gone. Many businesses that do not know about Section 179. If you are an owner, property manager, or facility manager, use this as a selling point with your internal stakeholders to get the work done before your roof becomes a larger issue and the benefit is gone. There is a chance to save big by acting proactively, the incentive may not be extended again next year. Finally, consult a tax professional before any project is committed. Better to be safe, than sorry. 


Sources: https://www.nrca.net/RoofingNews/final-regulations-implement-depreciation-tax-deduction.9-23-2020.8953/Details/Story?utm_source=enews&utm_medium=email&utm_campaign=nrca-enews-7751

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