Own commercial property in the Northeast? (CT, MA, NJ, NY) Then you know roof maintenance, repairs, and replacements aren’t cheap!
The good news? These costs may qualify as overhead, which could mean tax deductions for your business. Keep reading for valuable tips to remember when preparing your 2024 federal income tax return.
Can I Deduct The Cost Of My Roof Repair Or Replacement?
Historically, a business owner had to gradually depreciate the cost of a commercial roof replacement over multiple decades. Section 179 of the Tax Cut and Jobs Act (TCJA) allows you to deduct the entire cost of a commercial roof replacement in the calendar year of installation when it was acquired and placed into service. Also, a business can write off the original cost of an existing roof, less accumulated depreciation, when replacing it.
Many commercial roofing systems do not require frequent replacement. Instead, periodic repairs keep your commercial property in good working order. Under Section 179 of the TCJA, a business owner can deduct the price for a repair to their current commercial roofing system. Note that your annual net income (profit) could limit this deduction. In other words, your business may not deduct more than what it earned for a given year.
Naturally, according to Section 179 of the TCJA, limitations exist to the extent that your business may deduct a roof repair or replacement expense. These restrictions include the following conditions:
- The maximum amount you can deduct is $1,220,000 in 2024.
- The dollar-for-dollar phase-out amount is $3,050,000 for qualified assets placed into service in 2024.
The bottom line: Whether you purchased, financed, or leased new or used roof equipment and placed it into service between January 1, 2024, and December 31, 2024, you may qualify for a Section 179 deduction.
Can I Deduct The Cost Of Commercial Roof Maintenance?
A business owner can typically deduct the expense for routine roof maintenance and inspections in the year the cost was incurred. The IRS defines routine commercial roof maintenance as follows:
- Repairs resulting from standard wear-and-tear, including wear-and-tear caused by your trade or business;
- Repairs that are necessary to keep your commercial property in its normal condition and operating efficiently;
- Repairs are needed more than once during a 10-year period.
Energy-Efficient Commercial Roofing System Deductions
179D Deduction: The Energy Efficient Commercial Buildings Deduction, also known as the EPAct Deduction, enables commercial building owners to claim a deduction for installing an eligible energy-efficient property. If the building needs to become at least 25% more energy efficient than the model reference building, the deduction will be $0.57 per square foot. Every percentage point above this figure increases the deduction of $0.02 (up to a maximum of $1.13 per square foot). The deduction is only applicable to energy-efficient properties.
The 179D deduction allows business taxpayers to claim a deduction for constructing or installing qualifying buildings or systems. For example, the following projects may be eligible for a 179D deduction in 2024:
- A newly-constructed building;
- An addition to an existing building (HVAC, lighting, or building envelope upgrades);
- A renovation of an existing building.
A new building or system must meet a minimum threshold to qualify. Once eligible, energy savings are allocated on the incentive scale, up to $1.13 per square foot for each measure. Note that an existing building or system can qualify for the 179D deduction of up to $.57 per square foot for each project that exceeds energy reduction thresholds compared to the applicable ASHRAE standards: HVAC, lighting, and building envelope. Unquestionably, the 179D deduction can make your energy-saving project financially feasible.
High-Quality Commercial Roofing Services In The Northeast
At Vanguard Roofing, we have provided exceptional commercial roofing services for businesses across the Tri-State region, including Connecticut, Massachusetts, New Jersey, and New York, since 1972. We offer first-rate, customizable commercial roofing services, including inspections, maintenance, repairs, and replacements.
Contact us today to learn how we can assist you, or schedule a complimentary consultation to discuss your commercial roofing needs. In the process, we will provide you with a free estimate.
Disclaimer: The content contained within this article is for general information purposes only. It does not constitute legal, financial, or tax advice. We do not create a fiduciary relationship for your use of this content. You are strongly advised to consult with a qualified legal, financial, or tax professional for advice specific to your circumstances. We expressly disclaim all liability for actions taken or avoided based on this content.
