Is a Roof a Building?

[equinecpa]

Client constructed a roof to provide "covered storage'. Is this roof a land improvement? Or would it be considered a building? There are no walls. Section 1245 or 1250 property? I'm leaning towards building and section 1250 but thought I'd see if anyone has argued otherwise?

[TaxGuyBill]

Good question. I don't know the answer, but here are some thoughts to consider ...


For depreciation, the definition of Residential Real Property and Nonresidential Real Property (27.5 or 39 years) versus a different classification (lower number of years) is based on if it is §1250 property or not.

§1250 pretty much just says it means any "real property" that is subject to depreciation and is not §1245 property (not very helpful)..


Although not directly involved, other parts of the Code sometimes refer to §1.48-1 or §1.856-10 and they may have some insight to things. For example, when defining §1245 property, §1.1245-3 points to §1.48-1(c) (in contract to subsection (e) about buildings and their structural components). Although both of those Regs define a "building" as enclosed with walls, as I mentioned above, we need to know if it is "real property" or not.

§1.856-10 (again not directly applicable, but may provide some insight) refers to a "inherently permanent structure", with some examples. Note the last link (below) from an IRS Cost Segregation Guide about "inherently permanent structures".


I don't know if I helped or not (or just confused things even more), but perhaps my comments may give you (or somebody else looking at this question) something to think about.

https://www.law.cornell.edu/cfr/text/26/1.48-1

https://www.law.cornell.edu/cfr/text/26/1.856-10

https://www.irs.gov/businesses/cost-segregation-atg-chapter-6-5-inherently-permanent-standard#2

[ATSMAN]

I am assuming the roof is permanently attached to pillars or something to the land? If yes I would consider it to be 1250 property and if it is used in business 39 yrs dep.

Farms in my area have these sort of sheds all over the place. In the winter time I have seen some of them wrapped with that blue tarp!

[equinecpa]

It's a roof fastened to pillars, steel supports and framing but not walls. It's covered storage to keep the sun from damaging stored items. I think the permanently attached drags it into 1250 property classification.

I was just hoping I might have missed a good argument to the contrary.

[ATSMAN]

I think the permanently attached drags it into 1250 property classification.

That is the KEY factor! I have seen temporary structures constructed with fiberglass material as a temporary solution to a problem. There was never any intent of it becoming a permanent structure so it could be very easily removed.