Non-Residential building owners will be happy to learn that the Tax Cuts and Jobs Act expands what type of property is eligible for full expensing under Section 179 of the tax code. Prior to the 2018 changes, the investment of a new roof was to be capitalized and depreciated over a period of 39 years. Beginning in 2018 qualifying tax payers can immediately expense the full cost of any improvements to nonresidential roofs, including full re-roofs.
What is Section 179?
When you buy property, like a vehicle or machinery, for business uses, you can recover such costs over multiple years through depreciation. Section 179 allows taxpayers to immediately expense the cost of qualifying property rather than recovering such costs over multiple years.
Addition of Roofs as Qualifying Property under Section 179
The changes to the tax laws expands what property is eligible for Section 179. As of Jan. 1, 2018, qualifying property for Section 179 also includes "improvements to nonresidential real property placed in service after the date such property was first placed in service: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems."
Additionally, the expensing limits under Section 179 has significantly expanded. In 2018 the maximum amount a business may expense is now set at $1 million and the phase-out threshold increasing to $2.5 million.
Please contact your tax professional if you have questions regarding how your company can take advantage of the tax changes and contact Sprague Roofing for any of your nonresidential roofing needs.