Because of certain Tax Cuts and Job Acts there is a way that individuals, who own commercial buildings, can write off 100% of their commercial building’s reroof project. Building owners often spend significant amounts to repair or replace portions of various roof system components. It is not a matter of IF but rather, a matter of WHEN. The question remains—what current tax benefits can the owners receive when the work is done?
Several years ago, the Internal Revenue Service provided very helpful guidance in determining what could be expensed versus what had to be capitalized and depreciated. These guidelines have provided current tax savings that have greatly benefited building owners and, in the process, provided a means for them to significantly offset the expense of the roof costs. However, even with the additional opportunities, there were still tight restrictions on what could be currently expensed.
The Tax Cuts and Jobs Act, which was signed into law in early 2018, has given building owners an additional tool to recover costs. While prior to the TCJA, roof replacements did not qualify as first year expensing property under IRC Section 179, the Act has expanded what property could be expensed. There is a new class of property titled “qualified real property” which can qualify as first year expensing property and this class includes items such as roofs; heating, ventilation, and air conditioning; fire alarm protection and alarm systems; and security systems.
This is restricted to nonresidential buildings, but is great news for building owners. As always, the IRS makes sure that there are caveats and complexities around these rules, but just keep in mind that the options are out there. And as always, take the time to have a chat with your CPA and they can fill you in on what is available given your situation.