What is the depreciation life of a roof replacement?
A fresh schedule, separate from the building
Even if your rental has been depreciating for 20 years, a new roof starts its own 27.5-year schedule. The building's original schedule keeps running alongside it.
What happens to the old roof
- With a partial disposition election: you deduct the old roof's remaining basis in the year it is replaced.
- Without it: the old roof's cost stays in the building's basis and keeps depreciating.
If you sell before the roof is fully depreciated
The undepreciated cost stays in your basis and reduces your gain. Depreciation you did take can be taxed at sale as unrecaptured section 1250 gain, at a maximum federal rate of 25 percent. A tax professional can project the effect before you list the property.
The insurance clock resets too
For your insurer, a replacement roof's age starts at the completion date. Send the insurer proof of the new roof, since it may restore replacement cost on the roof or improve your rate. Keep the invoice and warranty registration where you can find them before the next storm.
General information, not tax advice. Related: roof age and insurance and ACV vs RCV.