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The Tax Law Changes That Effect You When Replacing Your Roof!

One of the largest capital expenditures that a building owner will incur is replacing a failing roof. Long term budget planning is complex, and the recent change in the tax law creates opportunities for owners to replace their roof and write off the entire costs in that year’s taxes!

The Tax Cut and Jobs Act, passed in December 2017, changed how building owners need to classify roofing repairs and replacements…to the owners’ benefit. Building owners will now be able to write off all roof repairs—even a roof replacement—thanks to changes in the tax code. The following article will explore the old roof classifications vs the new roof classifications.

Old vs. New Law

Prior to the December 2017 changes, the law required business owners to split all building repairs into two categories: capital expenditures and expenses. Capital expenditures include, among other projects, roof replacements. With capital expenditures, the value of the project depreciates over time, and the building owners under the old law could expense that depreciation. Expenses include smaller repairs such as roof patching and leaks. The old law allowed business owners to write off expenses in the current year’s taxes.

The Tax Cut and Jobs Act makes all roof repairs expendable under section 179. According to the National Roofing Contractors Association, businesses can expense all roofing-related costs, including a roof replacement, rather than just expensing the latter’s depreciation over multiple years. Additionally, the amount that business owners can expense increased from $500,000 to $1 million, making capital expenditures more advantageous to undertake from a tax perspective. Because these changes are now in effect, building owners can write off any roof repairs they complete in 2018 in this year’s taxes, even a roof replacement.

So, if you’ve been holding off on replacing your roof now just may be the perfect time to get it done.