Capital improvements refer to replacing a great portion of any major part of a building. The roof is an essential component of an establishment because it’s critical to its operation.
In this post, your local roofing contractor, Affordable Roofing Systems discusses things you should be aware of regarding tax deductibles for roofing work.
1. Reason for Replacements
If the roof has to be replaced due to sudden incidents, then the cost of roof repair doesn’t qualify as a capital improvement and might not be tax-deductible.
2. Wear and Tear Repairs
If the roof repairs are required to maintain an aging roof’s functionality, it will not be considered a capital improvement and might not be tax-deductible.
3. Roof Enlargement
Under the regulations, most of the time the enlarged part of the roof would have to be capitalized.
4. How Much Work Was Done?
Take note of the minor and significant repairs done on the roof. What parts were replaced and why? Generally, replacement of parts isn’t considered a significant portion of the roof and doesn’t qualify as capitalization standards. For tax purposes, repairs over 40% of the roof surface are subject to capitalization.
5. Other Capital Improvements
If other major components of the building benefited from the roof repair, then the cost is capitalized under the regulations.
6. Did You Claim a Partial Disposition Deduction?
If you did, the roof replacement cost is capitalized under regulations.
7. De Minimis Safe-Harbor Election
Taxpayers with Applicable Financial Statement can spend on items not over $5000 per invoice or per item. Meanwhile, those who don’t have an Applicable Financial Statement have a threshold of $2,500 per invoice per item. Consult with a CPA regarding these policies to understand your allotment and limits.
It’s important to talk with a tax expert throughout the process of your roofing project. Moreover, when it comes to high-quality roofing, you can rely on Affordable Roofing Systems, your trusted local roofing company. Call us at (813) 400-2515 or complete our online form for a free estimate. We work with homeowners in Clearwater and Tampa, FL.