Replacing a substantial part of any major component of a building is considered a capital improvement, and a roofing system is no exception. A new roof is considered an improvement, and the cost must be capitalized and depreciated. The recent issuance of the Tangible Property Regulations by the IRS has made it more difficult to determine what needs to be done. In most cases, a new roof will fall under a capital improvement, but the tax treatment for a minor roof repair is different.
Unfortunately, the cost of a new roof cannot be deducted. These load-bearing roof elements are less likely to be replaced unless there is catastrophic failure or prolonged neglect of the roof covering. If the average life of a roof is 25 years, then it may be time to get a new one. The depreciation expense of the new roof should be treated separately from the depreciation expense of the building itself, since it is recognized as an asset independent of the existing building.
If there has been damage to a part of the roof that needs to be repaired, such as a roof leak, then it would be considered a repair. It is important to find a reliable roofing company that can provide an accurate quote and save you money. State Roofing is one such company that can help with your home improvement needs, including repairing pre-existing defects before the property was purchased.
