November 2003

Evidence of depreciation

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A study shows roof systems depreciate much sooner than the IRS thinks

by Ambika Puniani Bailey
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For many businesses, the time period during which a building component can be depreciated is a major factor in determining when the component is upgraded or replaced. The current federal tax code requires a roof system to be depreciated over 39 years, which means a building owner has little tax incentive to replace a poorly performing roof system before that time. As a result, building owners not only are putting off replacing their roof systems (causing a loss of business to the roofing industry), but roof systems that may not be as energy-efficient as new systems remain in place. (For more information about the current law, see "Depreciation limit," July issue, page 22.)

NRCA has been lobbying Congress to change the tax code as it relates to commercial roof systems, arguing that they do not typically last 39 years. To effectively lobby to change the law, the roofing industry needed to produce evidence regarding the expected life spans of commercial roof systems, as well as the concerns building owners have about replacing them. As a result, the National Roofing Foundation's Roofing Industry Alliance for Progress hired the market research firm Ducker Worldwide, Bloomfield Hills, Mich., to conduct a study that would show how long commercial roof systems should be expected to last and reveal building owners' perceptions about purchasing new roof systems under the current tax code.

It is important to note the study does not provide the following: variance and position analysis of the various materials used for low-slope roof systems; material recommendations; scientific-based testing for life-span determination; warranty assessment and calculations of life span based on warranty terms; statistically reliable samples of building owners in each key application segment; and historical analysis of year-to-year changes in roof systems. Following is a synopsis of the study.

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