A new expensing rule now allows small businesses to complete reroofs rather than patches and repairs, reports Replacement Contractor contributor Gary Thill.
Thill explains:
The Tax Cuts and Jobs Act that was signed into law late last year allows full expensing of nonresidential roof improvements under Section 179 of the tax code. Under that provision, qualifying business owners can now write off roofing costs in the same year of the purchase. Previously for roofs, those costs had to be recovered over a 39-year depreciation cycle. The new provision sets the amount businesses may expense at $1 million and increases the phase-out threshold to $2.5 million.
While the new, more favorable expensing rule is a clear win, it is also a limited one. “It’s basically designed for small businesses,” said Duane Musser, vice president of government relations for NRCA. The new expensing rule also does not apply to rental property such as condos or apartments. Those structures are currently under a 27.5-year depreciation cycle. And while it’s possible Congress could expand the new expensing rule to those properties, it’s unlikely,
“We’re very pleased to see it in the final tax bill,” Musser said. “But it’s only a partial solution.”
For about the last 15 years, NRCA has lobbied Congress to reform the depreciation schedule for all nonresidential roofs, which is currently 39 years to 17 years. Although the new expensing rule only covers small business owners, it’s still a boon for roofers, Musser said.
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