How long can you depreciate a roof, and when does the clock start and stop?
When the clock starts
Depreciation begins when the roof is placed in service, meaning finished and ready for use, not when you sign the contract or pay a deposit. Residential rental property uses the mid month convention, so a roof finished on any day in March is treated as placed in service in the middle of March, and the first year's deduction is prorated.
How much each year
The method is straight line. A $13,750 roof on a rental deducts about $500 in each full year, which is 13,750 divided by 27.5. The first and last years are partial.
When it stops early
- You replace the roof again. The remaining basis in the old roof can often be written off with a partial disposition election instead of depreciating a roof that no longer exists.
- You sell. Depreciation ends in the month of sale, and depreciation taken is generally recaptured and taxed when you sell.
- You move back in. Converting a rental to your residence ends depreciation.
If insurance paid for it
When a storm claim pays for a rental roof, the insurance money and the old roof's remaining basis both affect your taxes, and a casualty gain or loss calculation may apply. Bring the insurer's estimate, the payment letters and the roofer's final invoice to your tax preparer.
Not the same as insurance depreciation
Insurers depreciate a roof against its expected life to figure what a claim pays, which has nothing to do with your tax schedule. See ACV vs RCV and roof age and insurance.