What depreciation method is used for a new roof?
How straight-line mid-month works
The cost is spread evenly over the recovery period, but the first year counts from the middle of the month the roof was placed in service. A rental roof placed in service in January gets about 11.5 months of depreciation in year one; one placed in service in December gets half a month.
Partial disposition of the old roof
When you replace a rental's roof, the old roof was part of the building's depreciable basis. The IRS lets you elect a partial disposition, writing off the old roof's remaining undepreciated cost in the year you replace it. The election is made on a timely filed return for that year, so raise it with your preparer before filing.
Section 179 and bonus depreciation
- Bonus depreciation applies to property with recovery periods of 20 years or less, so it does not reach 27.5 or 39 year building components.
- Section 179 can cover roofs on nonresidential real property, but not property used for lodging, such as residential rentals.
The insurance method, for comparison
Insurers also use a straight-line idea on claims, but their purpose is valuing a damaged roof, not spreading a cost for taxes. The two numbers will not match, and neither affects the other.
This is general information; your tax preparer should apply it to your situation. On the claim side, see ACV vs RCV roof claims.