How long do you depreciate a roof? Under current law, the roof depreciation life schedule for commercial roofs is 39 years, even though the lifespan of said roof is 17 years. That gap makes it difficult, nearly impossible, for businesses to recover investments in roofing systems. Because of this, the team at NIR recommends taking good care of your commercial roof for as long as possible, either through your own maintenance or with a roofing care plan. Learn more about how roof depreciation life is calculated and legislated.
How Long Do You Depreciate a Roof?
Prior to the 1980s, separate building components could be depreciated at different rates. But in 1981, Congress eliminated component depreciation and put in place a general depreciation period of 15 years for all building components. In 1993, the depreciation recovery period for non-residential property was extended to 39 years in order to raise additional revenue.
Unfortunately, the current 39-year depreciation period is not a realistic measure of the average lifespan of a commercial roof and serves as a disincentive for building owners. For example, if an owner replaces a roof before 39 years have elapsed, the owner still must carry that roof on the books even though it no longer exists. The Treasury Department’s Report to the Congress on Depreciation Recovery Periods and Methods (July 2000) corroborated this quandary, finding “…a ‘cascading’ effect, where several roofs are being depreciated at the same time, even though only one is physically present.”
Roof Depreciation Life Legislation
Legislatures such as Representative Tom Reed (R-N.Y.) and Bill Pascrell (D-N.J.) continue to meet with manufacturers, contractors, and business owners to discuss bipartisan legislation to make energy-efficient roofing systems more feasible. While it makes logical sense to have the depreciation schedule match up with the life expectancy of the product, so far the official rulings have yet to change.
There have been a variety of roof depreciation life bills introduced over the years:
- The Realistic Roofing Tax Treatment Act of 2007: which aimed to reduce the depreciation recovery period for roof systems to 20 years.
- The Roofing Efficiency Jobs Act of 2011: which again aimed for a 20-year depreciation rate.
- The Energy-Efficient Cool Roof Jobs Act: which aimed to permit a 20-year depreciation schedule for qualified energy efficient roofs.
Until new legislation is passed, the full 39-year depreciation schedule will be in effect for your current roof.
The Cost of Roof Depreciation
The best way to stay ahead of the roof depreciation life schedule is to maintain your current roof. Otherwise, you’ll see more and more money thrown away. Take for example a 30,000 sq.ft. valued at $250,000. On the current 39-year depreciation schedule, $6,411 would be deductible each year. With a commercial roof lasting an average of only 17 years, only $108,975 of that $250,000 investment would be realized before a new roof would be needed. This leaves $141,026 to be depreciated for an additional 22 years while the new roof now begins its depreciation schedule.
However, with proper maintenance and care by a trained professional, this commercial roof could easily last 25-30 years and reduce the current overlap of the depreciation schedule. Bottom line: it pays to maintain what you’ve got!
Start Your Roof Maintenance with NIR
Now that you know how long to depreciate a roof, stay on top of your roof maintenance with NIR! We offer commercial roof care plans to keep your roof performing at its best all year long, and can visit you for any necessary repairs when you schedule through our mobile app. Contact us to learn more!