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Over the last few months, we have begun to see an influx of commercial roofing interest, much more so than this time in previous years. Certainly a continued interest in commercial solar has helped, but something else was driving the interest and we couldn't figure out why. It wasn't rain or weather and the wild fires have only slightly affected the core of our market. No, it was something else all together and it wasn't until we had a discussion with our friend who is an accountant that it hit us.

The new Tax Cuts and Jobs Act has been contributing to the increased private negotiated, small to mid-size commercial roofing leads that our project management team has been running!

So we did some digging for you and this is what we found in relation to the tax reform, specifically under Section 179:

Business taxpayers can generally depreciate tangible property except land, including buildings, machinery, vehicles, furniture and equipment.

Changes to depreciation and how they will affect businesses may include:

• Businesses can immediately expense more under the new law; taxpayers may elect to expense the cost of any property and deduct it in the year the property is placed in service.
• Maximum deduction increased from $500,000 to $1 million.
• The phase-out threshold increased from $2 million to $2.5 million.
• The new law allows taxpayers to elect to include improvements made to nonresidential property. The improvements must have been made after the date the property was first placed in service.

These improvements include:

• Any improvement to a building’s interior
• Commercial Roofs
• Heating and air conditioning systems
• Fire protection systems
• Alarm and security systems

According to a recent Roofing Contractor magazine article, this essentially means that commercial roofing company customers can now fully expense the cost of a roof up to $1 million provided they do not acquire other tangible personal property that exceeds the $2.5 million cap.

Previous law required the cost of construction for a new roof to be capitalized and depreciated over 39 years. In addition to the Section 179 deduction, the bonus depreciation rules were also expanded. This is one of the few changes that affect 2017 tax computations. The provisions allow for property acquired after Sept. 27, 2017 and placed in service prior to Dec. 31, 2022 to expense 100 percent of the cost.

If you own a commercial property in Los Angeles, Orange County or Coachella Valley and would like additional information on how Chandler's Roofing might be able to help you improve your commercial roofing system, while taking advantage of these new tax reforms, please contact us today!