Maintaining and improving your commercial building often comes with a hefty price tag, and roof replacements or restorations are no exception. However, business owners now have an incredible opportunity to save significantly on roofing expenses, thanks to the Section 179 tax deduction. This tax provision can provide financial relief by allowing you to deduct the cost of qualifying property, including certain types of commercial roof improvements, in the year they are purchased or installed. Let’s dive into what the Section 179 deduction is, how it applies to roofing, and how it can benefit your business.

What Is Section 179?
Section 179 of the IRS Tax Code allows businesses to deduct the full purchase price of qualifying equipment and property purchased or financed during the tax year. Unlike traditional depreciation, which spreads the deduction over the useful life of the property, Section 179 permits you to deduct the entire cost upfront, providing immediate financial relief.  Originally designed to encourage businesses to invest in themselves, the deduction applies to a wide range of equipment, including machinery, vehicles, office furniture, and—thanks to recent amendments—certain types of nonresidential building improvements, including roofs.
Key Benefits of Section 179

• Immediate Tax Savings: Instead of waiting years to recoup costs through depreciation, Section 179 allows you to deduct the full expense in the first year.
• Improved Cash Flow: By reducing your tax liability, you can retain more money to reinvest in your business or cover other expenses.
• Encourages Investment: Knowing you’ll receive a tax deduction can make it easier to justify significant investments, such as a roof replacement.

Section 179 and Commercial Roofs
Before the 2018 Tax Cuts and Jobs Act (TCJA), the cost of roofing improvements had to be depreciated over 39 years, making it a long-term financial burden for many business owners. However, the TCJA introduced a significant change by expanding the scope of Section 179 to include certain nonresidential building improvements. These include:

• Roofs
• HVAC systems
• Fire protection and alarm systems
• Security systems

This means that, as a business owner, you can now deduct the cost of qualifying roofing improvements made to your commercial property in the same year they are completed.
Qualifying Roofing ProjectsNot all roofing expenses qualify for the Section 179 deduction. To take advantage of this tax benefit, your roofing project must meet certain criteria:

1. Nonresidential Buildings Only: Section 179 applies exclusively to improvements made on commercial or industrial properties. Residential properties, such as apartment complexes or rental homes, are not eligible.
2. Permanent Improvements: The deduction applies to permanent upgrades to the roof structure, such as replacements, restorations, or enhancements designed to extend the roof’s life or improve energy efficiency.
3. New or Used: The roof improvements must be purchased and placed in service during the tax year in question. Both new and used roofing materials are eligible, provided they meet IRS requirements.

Common examples of qualifying roofing projects include:

• Full roof replacements with durable materials such as TPO, PVC, or metal.
• Roof coatings designed to extend the life of an existing roof.
• Energy-efficient upgrades, such as cool roofing systems, which reduce energy consumption.

Section 179 Limits for 2023 and Beyond
As of 2023, the maximum deduction under Section 179 is $1.16 million, with a phase-out limit beginning at $2.89 million in total qualifying equipment purchases. This means that if your total qualifying property exceeds $2.89 million, your deduction will be reduced on a dollar-for-dollar basis. Once your total purchases exceed $4.05 million, the Section 179 deduction is no longer available.  These limits are adjusted annually for inflation, so it’s important to verify the current thresholds when planning your roofing project.

How Section 179 Compares to Bonus Depreciation
In addition to Section 179, the IRS also offers bonus depreciation, which allows businesses to deduct a percentage of qualifying property in the first year. While Section 179 and bonus depreciation can sometimes overlap, there are key differences:

• Flexibility: Section 179 allows you to choose which assets to deduct, while bonus depreciation must be applied to all qualifying assets.
• Limits: Section 179 has deduction limits and phase-out thresholds, whereas bonus depreciation has no limits.
• Eligibility: Section 179 applies to both new and used property, while bonus depreciation typically applies only to new property.

Many businesses use a combination of Section 179 and bonus depreciation to maximize their tax savings.
Benefits for Business OwnersFor business owners in Detroit and beyond, utilizing Section 179 for roof improvements can offer several advantages:

1. Energy Savings: Investing in energy-efficient roofing systems, such as reflective coatings or green roofs, can lower your utility bills while qualifying for the deduction.
2. Increased Property Value: A new or improved roof enhances the value and marketability of your commercial property.
3. Lower Maintenance Costs: Upgrading your roof reduces the likelihood of leaks, water damage, and costly repairs, saving you money in the long run.
4. Tax Efficiency: By reducing your taxable income, Section 179 allows you to keep more of your hard-earned money.

How Motor City Roofers Can HelpAt Motor City Roofers, we understand that investing in a new commercial roof is a significant decision. That’s why we’re committed to helping Detroit-area business owners make the most of their investment by navigating the complexities of Section 179. Our team can provide:

• Expert Guidance: We’ll help you determine whether your roofing project qualifies for the Section 179 deduction.
• Customized Solutions: Whether you need a full roof replacement, restoration, or energy-efficient upgrade, we’ll design a solution tailored to your needs and budget.
• Seamless Installation: Our experienced contractors ensure that your project is completed on time and to the highest standards.

Steps to TakeIf you’re considering a roofing project and want to take advantage of Section 179, here’s what you need to do:

1. Consult a Tax Professional: Speak with an accountant or tax advisor to confirm that your roofing project qualifies for the deduction and to understand how it will impact your taxes.
2. Plan Ahead: Section 179 applies only to property purchased and placed in service during the tax year, so timing is crucial. Schedule your project early to ensure it’s completed before the year ends.
3. Work with a Trusted Roofing Contractor: Choose a reputable contractor, such as Motor City Roofers, who understands the requirements of Section 179 and can provide the necessary documentation for your tax records.

The Section 179 deduction is a powerful tool for business owners looking to invest in their commercial property while saving money on taxes. By applying this deduction to qualifying roof improvements, you can enjoy immediate financial benefits, enhanced property value, and long-term savings.  At Motor City Roofers in Detroit, Michigan, we’re here to help you make the most of your roofing investment. From navigating tax incentives to delivering top-quality workmanship, we’re your partner in protecting and improving your commercial property. Contact us today to learn more about how we can assist with your roofing needs—and how Section 179 can work for you!