Should a roof repair be depreciated or expensed?
Short answer. On rental or business property, a true roof repair that keeps the roof in working order is usually expensed in the year you pay for it, while work that betters, restores, or adapts the roof is capitalized and depreciated. Replacing the entire roof covering is typically capitalized; patching leaks or replacing damaged shingles is typically a repair.
The three questions the IRS asks
- Betterment: Does the work fix a defect that existed before you bought the property, enlarge the roof, or materially increase its capacity or quality?
- Restoration: Does it replace a major component or substantial structural part, rebuild after a casualty loss, or return a roof from disrepair? Replacing all or most of a roof usually counts.
- Adaptation: Does it convert the property to a new or different use?
If none apply, the work is generally a deductible repair.
Practical examples
- Replacing a few wind-blown shingles: a repair, so expense it.
- Replacing one slope damaged by a falling limb: often a repair, depending on how large it is relative to the whole roof.
- A full tear-off and replacement after hail: generally a restoration, so capitalize it.
The casualty twist
When an insurance-covered casualty is involved, amounts spent restoring the property may have to be capitalized up to the basis adjustment taken for the casualty. This is where a tax professional earns the fee.
On your own home
None of this applies to a primary residence: repairs are not deductible, and improvements add to your basis.
General information, not tax advice. Related: partial replacement and matching and ACV vs RCV.