179 Tax Deduction for Commercial Roofing Projects

Are you delaying commercial roofing projects because of the cost? Learn how to use the 179 tax deduction to maximize your purchasing power in 2020 and beyond.

A recently updated 179 tax deduction for roofing improvements to commercial facilities, including roofing repairs, waterproofing, and re-roofing, makes 2020 the best time for commercial building owners to keep up with maintenance and make necessary repairs that are considered deductions within the year. Act fast to lock in the best tax credits. Here’s why: 

Updated Section 179 Tax Deduction for Roof Maintenance and Repairs

Last year’s Tax Cuts and Jobs Act included a change to the Section 179 deduction that is important to highlight for roofing projects. The new change increases the amount of money that a business owner can deduct (up to $1 million) on their income taxes as an expense in the first year rather than being considered a capital expense subject to depreciation over multiple years. Section 179 of the IRS Tax Code encourages qualified expenses that are investments, like maintenance, and improvements to roofing and HVAC. It allows commercial building owners to deduct the full price of these business purchases in the same calendar year. 

This change is significant because, in the past, repairs and maintenance projects to enhance a property, restore it to working condition or adapt it to a new use were considered capital expenses and were subject to depreciation over several years rather than deducted in the first year. Also, under the old rules, a roof coating was a maintenance expenditure, while a roof replacement was considered a capital expense. The Tax Cuts and Jobs Act changed the expensing rules by increasing the amount of the eligible deduction. The investment phase-out now begins at $2,550,000 and is completely phased out when $3,570,000 of Section 179-eligible assets have been placed in service for the tax year—accelerating the expense on commercial roof maintenance results in reduced taxes for a building owner. These limits are subject to inflation starting in 2019 and beyond. Additionally, be aware; if your repair cost exceeds $2.5 million, then you are not qualified for the full $1 million in deductions. Additional benefits may be available through tax rebates and credits for energy-efficient enhancements.