How is a roof replacement depreciated for taxes?
Short answer. For taxes, a roof replacement on a rental is capitalized and depreciated straight-line over 27.5 years, or 39 years on nonresidential property, starting the month it is placed in service, and you may be able to write off the old roof's remaining basis with a partial disposition election. On your own home there is no depreciation; the cost adds to your basis.
When insurance paid for the replacement
Storm replacements on rentals involve two steps that interact:
- The casualty: insurance proceeds are compared with the old roof's adjusted basis. If the proceeds are larger, there is a gain, which you can often postpone by reinvesting in the replacement.
- The new roof: its cost is capitalized. If you postponed a gain, the new roof's basis is reduced by that amount.
Your own home
No depreciation. Keep the invoice: the cost of a new roof increases your basis, while insurance reimbursements reduce it.
A home office or rented room
The business percentage of a roof replacement can be depreciated. A qualifying home office portion is treated as nonresidential real property over 39 years.
What to give your preparer
- The contractor's invoice and completion date
- The insurance estimate and payment letters
- Proof of your deductible payment
- The old roof's original cost, if you know it
Timing matters too. The partial disposition election for the old roof is made on the return for the year of replacement, so bring these papers before that return is filed, not after.
General information, not tax advice. On the claim side, see recoverable depreciation on a roof and ACV vs RCV.