For commercial building owners that have upgraded their roofs in 2018, or are planning to in 2019, there some new tax breaks that you will want to take advantage of. The Tax Cuts and Jobs Act of 2017 expanded the definition of property eligible for full expensing under Section 179 of the tax code. The expansion includes improvements to nonresidential roofs, amongst other property expansions, as of January 1, 2018. If you’ve made any upgrades or improvements to your nonresidential roof in 2018 you may be eligible to receive the new tax benefits. The changes to Section 179 go beyond the addition of new, eligible properties and extend to the way in which businesses can receive the tax benefits for qualifying properties. In the past taxpayers had to recover costs as property improvements depreciated, with the new guidelines they are able to immediately expense the cost of the qualifying property for tax purposes.
With these changes to Section 179 by the new tax law, qualifying taxpayers are now eligible to completely expense the cost of any improvements to nonresidential roofs, beginning in 2018 and moving forward. What it boils down for our customers is that any improvements to nonresidential roofs, including roof repairs, upgrades, and full roof replacements for existing buildings are now eligible to be expensed in the year of purchase. Additionally, with the new tax law, the maximum amount a business can now expense is $1M with the phase-out threshold increasing to $2.5M. The new limits are in place for qualifying properties placed in service beginning after December 31, 2017, with inflation being accounted for beginning in 2019.
Nonresidential roofs are not the only property types affected by the new tax law. Section 179 now 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.” While it is beneficial to know how tax laws change, always contact your tax professional for how the new tax laws can help you take advantage of nonresidential roofing upgrades in 2018.