How to Depreciate a New Roof on Rental Property
In the United States, the Internal Revenue Service allows individual and business taxpayers to claim a deduction for the value of rental real estate depreciation on their income tax returns. The Internal Revenue Code permits depreciation under a straight-line method over a period of 27 1/2 or 39 years, dependent upon whether the rental property is residential or non-residential. Taxpayers claiming the depreciation deduction for a new roof must file Form 4562, Depreciation and Amortization, in the year the roof is put in service.
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Instructions
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Obtain Form 4562 from the IRS's website at irs.gov or through a phone request to 800-TAX-FORM.
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Input the business's name and identifying number -- typically either an employer identification number or a tax identification number -- below the header on Form 4562.
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Enter the month and year you placed the new roof in service on line 19h or 19i of Form 4562. Line 19h is used for residential rental property while line 19i is used for non-residential rental property.
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Enter the basis of the new roof in service on line 19h or 19i of Form 4562. The basis of the roof is generally equally to the amount you paid for materials and contractor services in constructing the new roof.
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Calculate the depreciation deduction for the new roof and input it on line 19h or 19i of Form 4562. Depreciation is calculated in equivalent monthly amounts over the 27.5 year life allowed for residential real estate or the 39 year life allowed for non-residential real estate. When depreciation is calculated for a roof, it is generally calculated as if it is placed in service in the middle of the month when substantially all work on the roof is completed.
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Total all depreciation claimed on Form 4562 on line 22 of the form.
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File Form 4562 with your business or individual income tax return.
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Tips & Warnings
Typically, a new roof will be considered "in service" on the date that substantially all work is completed on the construction.
References
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