Section 179 – Commercial Building

Tax Deductions

The US Government has created an incentive for businesses to grow- Section 179.

Businesses can now deduct the full purchase price of material and services during the current year. Section 179 encompasses any upgrades, improvements, materials, and property purchased in the current calendar year.

We'd prefer you speak with your tax professional since there are many commercial building tax deductions. However, you can consider deducting most items you purchase for your business (up to $1,050,000). This will include buildings and their maintenance upgrades, equipment, vehicles, security systems, and even office furniture.

How do you use Section 179 in Commercial Roofing?

When you restore or replace a commercial roof, you want to calculate your energy cost reduction. Roofs can provide energy savings a number of ways. Insulation, leaks, and solar reflectance all contribute in some way to the energy efficiency of your building. Let’s look at an example to see how you could calculate your deduction.
Example: Let’s say you decide to invest $200,000 towards a roof replacement, and are planning on paying $7 per square (unit of measurement for roofing: 10’x10’ section of property). Now let’s assume 12% in energy cost savings once you restore the property. To calculate your savings, you would:

$7.00 x 12% (0.12) = $0.84

$200,000/$7 = 28,571 sq. ft.

$0.84 x 28,571 sq. ft. = $23,999.64 tax credit

$200,000 - $23,999.64 = $176,000.36 (New cost after the tax credit).

Use these numbers as just an example. However, the worse shape your roof system is in, the greater the difference in your energy savings will be. This means, you could see substantial savings for your business. Think about the amount of money you could save if your property experienced a 40% energy efficiency increase.

Should I Finance?

You could collect your tax credit, and finance your project. If you overpay on your taxes, you'll receive part of the credit in the form of a check. You've now made money restoring your property, and will save on energy costs once your project is complete.

We'd defer to your tax professional when weighing your finance options, but are more than happy to help however we can.

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