Investor · Buffalo, NY · Member since 2014 · 12 posts · 4 votes
Hi,
I purchased a SFH for rental purposes that needed a new roof. I spent $10k putting the new roof on and have been discussing its treatment with my accountant. Seems like he is of the opinion it should be added to the basis of the property and depreciated over 27.5 years along with the rest of the building.
That seems like too long of a period of time since the roof will likely need to be replaced before then. I thought I had read somewhere a while back safe harbors for small taxpayers allowing maintenance expense under $10k to be taken immediately but I can't seem to find that with a quick google search, but at the very least shouldn't there be a way to depreciate the roof portion any quicker? Something like 10-15 years?
Looking for any advice from someone who has already dealt with this issue.
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
11y
A roof is a capital improvement that extends the life of your property. Therefore the cost of the roof should be capitalized and depreciated over a period of 27.5 years.
I believe you are talking about the "Safe Harbor for Routine Maintenance" rules which state that you may expense items that you reasonably expect to perform such maintenance at least once every ten years. Typically, a roof would not fall under this safe harbor, however if you are in an area that experiences extreme weather conditions, you may be able to make the case that you have to repair your roof or do a total re-roofing at least once every ten years.
Investor · Fargo, ND · Member since 2014 · 25 posts · 6 votes
11y
You're stuck with the 27.5 years Paul. Under audit I can not possibly imagine a scenario in which the IRS would budge on expensing something like this.
Investor · Buffalo, NY · Member since 2014 · 12 posts · 4 votes
11y
Thanks Brandon, that is exactly what I was thinking of.
The property is in Buffalo, NY so maybe the argument could be made. In my opinion, I'd put the average roof life around here closer to 10-12 years, however, I recognize this is probably aggressive and there isn't much benefit to it so I'll stick with the 27.5 years, but wanted to make sure me or my accountant weren't forgetting any options.
Investor · Buffalo, NY · Member since 2014 · 12 posts · 4 votes
11y
Correction, the small payer safe harbor is what I was thinking of. Unfortunately this building doesn't have enough basis to really make this useful to me either.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
11y
You have no choice about this. You have to depreciate it and the IRS specifies the timeline. But, if you do end up replacing it, say, 10 years from now, you can immediately take the remaining depreciation. Then start depreciating the new one.