In May, legislation was introduced in Congress to reform the outdated depreciation schedule for certain energy-efficient commercial roof systems. Passing such legislation has long been a goal of NRCA because it will remove an obstacle in the tax code that limits economic growth in the roofing industry, facilitating significant new job creation among roofing contractors, manufacturers and other roofing industry entrepreneurs.
Between 1981 and 1993, the depreciation schedule for nonresidential property, including commercial roof systems, was increased twice during that time from 15 to 39 years. However, the average life span of most commercial roof systems only is about 17 years, according to a study by global consulting firm Ducker Worldwide LLC. The disparity between the cost recovery schedule and average life of the asset often acts as an incentive for building owners to delay the replacement of older, failing roof systems in favor of piecemeal repairs. Moreover, building owners who install new roof systems before the current 39-year schedule has elapsed are required to depreciate roof systems at different schedules, causing paperwork burdens.
The legislation (H.R. 4740 and S. 2388) rectifies this problem by establishing a 20-year depreciation schedule for commercial roof system retrofits that meets a benchmark energy-efficiency standard. The 20-year schedule closely matches the average life span of most commercial roof systems, removing an artificial incentive in the tax code that inhibits building owners from moving forward with full roof system retrofits in a timely manner.
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