Write of roof coating expense in first year not 39 years like traditional commercial roofing
Repairs vs. Improvements
- Repairs (like fixing leaks or replacing small sections):
These are deductible as maintenance expenses in the year they occur (ordinary and necessary business expenses under IRC §162).
→ Example: Replacing a few damaged shingles = immediate deduction. - Improvements or Replacements (like full roof replacement or upgrades):
These are capitalized as part of the building’s cost basis under IRC §263A, not immediately deducted.
→ Example: Replacing the entire roof = capital expenditure → must be depreciated.
🧾 2. Depreciation Rules for Commercial Roofing
- A new commercial roof is generally classified as part of nonresidential real property with a 39-year depreciation life (straight-line) under MACRS.
→ You can’t normally expense the full cost right away.
However, there are exceptions that can speed up deductions:
A. Section 179 Deduction
- Since the 2017 Tax Cuts and Jobs Act (TCJA), roofs on nonresidential buildings qualify for §179 expensing.
- Businesses can immediately expense up to the annual §179 limit (for 2025, likely around $1.22 million, phased out after $3.05 million in total assets placed in service).
- Roof must be an improvement to an existing nonresidential building, not part of new construction.
B. Bonus Depreciation
- Full roof replacements don’t usually qualify for 100% bonus depreciation because they’re part of real property.
- But certain roof components or energy-efficient systems (like solar roofing) might qualify if considered separate tangible property.
⚙️ 3. State and Local Tax Considerations
- Some states don’t conform to federal §179 or bonus depreciation rules.
- Roofing work might also be subject to sales tax:
- In many states, materials are taxable, but labor for commercial installations may or may not be.
- Contractors may pay sales tax on materials or charge it to the customer depending on state law.