If you own commercial property in Wappingers Falls, NY, or the surrounding Tri-State area, then you’ll know how expensive maintaining, repairing or installing a new roof can be. Fortunately, those costs can be considered overhead, which means you may be eligible for certain tax deductions. The following are some of the tax tips for commercial roofs you should keep in mind in 2022.
Can I deduct the betterment, restoration, or adaptation of my roof?
You’ll want to write off any work which adds value to your building (betterment), restores your building back to its original condition (restoration), or customizes it for a different use (adaptation). Previously, you would have to depreciate these items over a certain number of years following the work you did. This includes if you:
- Replace your old BUR roof – If you install a new single-ply membrane, then you’re upgrading your roof and adding value.
- Restore the condition – If your roof is experienced wear and tear and you have a commercial roofer restore it.
- You replace your roof – If you replace your existing roof with a useable patio, you’ve customized it for additional use.
However, under Section 179 of the recently passed Tax Cuts and Jobs Act, you can immediately expense the cost of this type of roof work in the year it was performed if you qualify. Just keep in mind that there are limits on these costs, which include the following:
- The maximum amount you can expense is $1.05 million (that’s one million, fifty thousand dollars)
- The phase-out threshold is still $2.55 million
These limits are effective if you’ve bought, finances, or leased new or used equipment and put it into service by midnight December 31, 2021. To claim the deduction, use Form 4562.
Many commercial building improvements qualify for Section 179, including roofing improvements to non-residential facilities, roofing repairs, waterproofing, and even full reroof projects on existing buildings.
Can I deduct maintenance costs?
Any routine maintenance, from minor repairs to annual inspections, that you have done on your roof can be fully deducted in the year that it was done. The IRS defines routine commercial roof maintenance as the following:
- Repairs resulting from regular wear and tear
- Repairs resulting from wear and tear caused by your trade or business
- Repairs needed to keep your commercial property in its normal condition and operating efficiently
- Repairs required more than once during a 10-year period or during its class life.
Energy-Efficient Roofs
179D Deduction- Energy Efficient Commercial Buildings Deduction (also known as the EPAct Deduction) enables building owners of commercial buildings at any height and residential buildings that are four stories or more above grade to expense up to $1.80 per square foot of the cost of improvements that increase energy efficiency
The 179D deduction allows taxpayers to claim a deduction for installing qualifying systems and buildings. The following projects may qualify for 179D:
- Newly constructed buildings
- Additions to existing buildings (HVAC, lighting, or building envelope upgrades)
- Renovations in existing buildings
A minimum threshold must be met in order for a building or building system to qualify. Once qualified, energy savings are allocated on the incentive scale, up to $0.60 per square foot for each measure. Here are two ways a building or building system can qualify for the 179D deduction:
- Up to $0.60 per square foot for each building system that exceeds energy reduction thresholds compared to the applicable ASHRAE standards: HVAC, lighting, and building envelope.
- $1.80 per square foot for a total energy use reduction of 50 percent or more compared to the applicable ASHRAE standards.
Keep these general tax tips in mind, but make sure you consult with a local tax professional to make sure you qualify. For commercial roof services in the Tri-State area, contact us at Vanguard Roofing today.
Post Updated 2/2022
