Taxes and Preventive Maintenance

October 2009 Volume 1 Number 10

When you have a leaking roof, there is a wide spectrum of options for fixing it. You can choose to “patch and pray”, to tear-off the roof and completely replace it, or you can choose to renew and restore the roof.

Debates about the best way to fix a roof abound. Often, however, these debates focus only on the technology involved and the total cost after taxes may not be considered. However, when the tax consequences are taken into account, preventive maintenance financially becomes the clear choice.

Internal Revenue Codes specify that the cost of maintenance for business property is a deductible expense. You will do well to explore this issue with your tax consultant before making any decision. On the other hand, money spent for capitol improvements must be amortized over the life of the property and can only be deducted as an annual depreciation. The cost of the improvement is recovered in either case, but the period of time over which the deductions are spread (immediately for maintenance, 15 years for improvements) gives restoring a roof a major cost advantage.

Not all roofing systems will receive the same tax advantages. The way the work is performed determines whether the cost can be written off in the current year or must be capitalized. The Supreme Court offered the following guideline in Welch v. Helvering: A repair is an expenditure for the purpose of keeping the property in an ordinarily efficient operating condition. It does not add to the value of the property, nor does it appreciably prolong its life. It merely keeps the property in an operating condition over its probable useful life for the uses for which it was acquired. Expenditures for that purpose are distinguishable from those for replacement, alterations, improvements or additions which prolong the life of the property, increase its value or make it adaptable to a different use. “The one is a maintenance charge, while the others are additions to capital investment which should not be applied against current earnings.”

In selecting a process for your roof, you should do well to first be sure your choice makes commercial sense. In all cases, unless the roof is too far gone, a good coating system will be the most effective. Add the tax savings advantage – and you will quickly see this makes sense.

We provide many property owners and managers with preventive maintenance programs. Prior to beginning the program, a baseline assessment needs to be performed and deficiencies repaired. This will bring the roof system back to a maintainable condition.

A typical scope of work for a program follows.

1. Perform a comprehensive inspection
2. Remove all debris from roof.
3. Make minor repairs.
4. Caulk flashing, pipes as needed.
5. Top-off pitch pockets.
6. Evaluate any active leaks.
7. All repairs will be done according to the manufacturer’s specifications.

We will customize a plan that fits your needs, facility and budget. The initial baseline survey is free.

Spann Roofing & Sheet Metal, Inc. offers a vast array roof services to meet your needs like:

New Construction • Reroofing • Renovation Inspections • Maintenance • Repairs

And superior products you can trust like:

Modified Bitumen • BUR • Single Ply Coatings • Metal • Tile • Shingles

459 Allied Dr. • Conway, S.C. 29526 • 843-347-2220 • Fax: 843-347-9719 www.spannroofing.com