2018 Roofing & Solar Industry Tax Code Breakthrough
What’s new in the roofing and solar industry? Federal Tax Code! The new tax code implemented by the Trump Administration now allows you to fully expense the improvement of qualified real property in the first year of purchase. That’s right. That means no need for a federal tax depreciation schedule, as was the case under the previous tax code.
Congress enhanced IRC Section 179 expensing in the latest tax reform bill: The Tax Cuts & Jobs Act, signed December 22nd, 2017, which now includes enhanced Section 179 expensing.
The Section 179 expensing provision (deduction) is intended primarily to help small businesses purchase needed equipment AND write off the full amount on their taxes for the current year. Effective 2018, qualifying 179 property includes most business equipment, such as computers and certain vehicles, construction equipment and machinery purchase. But the significant breakthrough for the roofing industry and its customers is that Section 179 property now includes improvements to nonresidential roofs!
This is an incredible policy victory for the roofing industry and its customers. The new limit on the total amount of 179 property a business can purchase each year is up to $2.5 million (up from $2 million), and the annual limit for the phased-out deduction has been raised to $1 million (from $500,000).
This means a building owner can now write-off up to $1 million in the year that a commercial roof is purchased. And the $1 million annual deduction/$2.5 million maximum investment limits are now permanent and indexed for inflation starting in 2019.
In addition to expensing your new roof, businesses can also expense their solar installation! Solar installation falls under the same category. Instead of depreciating the installation and equipment over several years, you can now fully expense your solar installation.
We understand that every business is different, and as such, this may not make sense for you specifically. The best advice we can give is for you to consult your tax professional to take advantage of this incredible tax gift!
Vice President of Marketing & Business Development
RSI Roofing & Solar