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 2021 and 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 $1.02 million
- The phase-out threshold is still $2.55 million
These limits are effective if you’ve performed betterment, restoration, or adaptation work on your roof after December 31, 2017. Amounts have been indexed for inflation in 2019.
Qualifying property for Section 179 and put into service after Jan. 1, 2018, and includes:
- Heating, ventilation, and air-conditioning property
- Fire protection and alarm systems
- Security systems
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.
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.
Are there any tax extensions?
Some packages which were scheduled to expire at the end of 2020 have been extended.
- There is a permanent extension for the Energy Efficient Commercial Building Tax Deduction. This deduction allows for a deduction of up to $1.80 per square foot for certain energy-efficiency upgrades to qualifying building owners. This will index the deduction for inflation on an annual basis.
- The Solar Investment Tax Credit has a two-year extension at 26% for 2021 and 2022.
Post Updated 3/2021