Can you depreciate a roof?
Short answer. It depends on which kind of depreciation you mean. For taxes, you can depreciate a roof only on rental or business property, where a new roof on a residential rental is generally depreciated over 27.5 years; on the home you live in, a new roof adds to your cost basis instead. For insurance, the insurer depreciates your roof on a claim based on its age and condition, which reduces what you are paid unless the depreciation is recoverable.
Roof depreciation for taxes
- Personal residence: no annual deduction. Keep the invoice, because the cost of a new roof generally increases your home's basis.
- Residential rental: a roof replacement is usually treated as a capital improvement and depreciated over 27.5 years, while small repairs may be deductible in the year you make them.
- Commercial property: different recovery periods apply.
The line between a repair and an improvement follows specific rules, so confirm the treatment with a tax professional.
Roof depreciation for insurance
On a claim, the insurer estimates the cost to replace your roof and subtracts depreciation for its age and condition, often the roof's age divided by an expected life the insurer assigns to the material. A 10-year-old roof with a 25-year expected life might be depreciated about 40 percent.
- On a replacement cost policy, that depreciation is usually recoverable once the roof is replaced.
- Under an ACV roof endorsement or a payment schedule, the roof's depreciation is not paid back.
Ways to reduce insurance depreciation
- Prove the roof's real age with a permit, invoice or warranty registration.
- Document good condition with photos and maintenance records.
- Ask what life expectancy the insurer used for your material.