BOMA Position
BOMA International supports amending Section 168 of the Internal Revenue Service Code to shorten, the recovery period for the depreciation of commercial roofs to 20 years.
Background
Building owners currently depreciate roofs on a 39-year schedule, the same schedule currently used to depreciate the life of the building itself. In 1981, Congress eliminated the ability to depreciate separate building components at different rates and put in place a general depreciation period of 15 years for all building components. Then, in 1993 in order to raise revenue, Congress extended the recovery period for nonresidential property to 39 years.
Because the average life of a commercial roof is just under 20 years, the 39-year depreciation schedule for commercial roofs makes little business or environmental sense. Permitting the depreciation of roofs on a shorter, more realistic schedule would encourage building owners to incur the added expense of replacing older, less efficient roofs. With this added incentive to replace nonperforming roofs, building owners will help protect the integrity of the entire structure, increase the structure's energy efficiency, and add to the economy as a whole by spurring activity within the construction industry.
Action Requested
The Realistic Roofing Tax Treatment Act of 2005 was introduced in the 109th Congress in both the House and Senate and would reduce the depreciation recovery period for roof systems to 20 years. However, neither the House nor Senate bill received much attention.
BOMA International will work to educate Congress on the realities of replacing roofs on commercial buildings and urge for passage of a reduced time-line for their depreciation.