Roof Depreciation

[ruthc]

A person having an apt house (2/3 rental) with a new 1/2 roof which needed to be repaired, and it has a 30 yr guarantee. It was for $4650. I depreciated it under Macrs SL 27.5 yrs MM. I only get $61 for depreciation (2/3 rental). Is there any way I can depr it another way or take any larger deduction for it other than taking a complete repair for it? She really need the deduciton. Thanks

[Gretel]

Well, needing the deduction doesn't really change anything.

Maybe this repair qualifies as a repair deduction. Beware, you will hear very different opinions on this subject. In prior years there been discussions on this board, which you can search.

[oceanlovin'ea]

repair vs replace

I went to an NCPE seminar a few years ago where this was discussed in detail.

A lot depends on how the receipt or contract was written up. If it was written up that 1/2 of the roof needed to be replaced, then it has to be depreciated.
If it was written up the 1/2 of the roof needs to be repaired and this is what will be done to repair the roof, then it is an expense.

The case that was discussed was that someone had had portions of the roof "repaired" and that is what the receipt said until he had a new roof. But it was allowed as an expense.

So be careful how things are worded.

Linda, EA

[Gretel]

That is an interesting twist. I do believe that IRS agents will be impressed by this. However, where I live any workman will be more than happy to write on his receipt whatever I want. Can only get tricky if IRS wants to know exact details to proof substance of transaction and make their own termination.

[taxea]

I don't think that the roofer is qualified regardless of how he writes the contract to determine whether it was a repair or an improvement.
If it raises the FMV on the home then it is an improvement, if it doesn't then it is a repair. Generally speaking, a full replacement is considered an improvement because it is usually included as a feature on the sale of the home but when only part of the roof is replaced I would take it as a repair.

[Kram BergGold]

My understanding

In the case of replacing an entire roof, if the roof was worked on because it was leaking then taking it as a repair is ok. Otherwise it has to be depreciated. In your case an argument can be made for repair where only 1/2 is replaced. However, I assume this is an owner occupied multi family. If you expense the rental portion you can't add the personal portion to basis when it is sold as that too is a repair. If the expected gain is well below the 250/500k then who cares.