If I treat the roof as a casualty loss, do I just keep depreciating the entire property (including the old roof) like normal?
As I understand things, your old roof is not listed as a physically separate asset and never was. You can't "treat it like a casualty loss", because it's not a casualty loss. A casualty loss would be something like a fire, hurricane, or tree fell on the house totally destroying the roof in one fell swoop. Your roof replacement is because of normal wear and tear, or (more likely) your insurance company requirements where they're going to drop coverage if the roof is over a certain age. (10 years for some, 15 for others).
Then the decrease in basis (from the loss) would be taken into account upon sale?
There is no decrease in basis. A decrease would be the last thing you'd want anyway, as a decrease in basis would increase your taxable gain upon sale of the property.
I know you're trying to reduce the depreciation you're required to take, and I understand why. But it just doesn't work the way you want it to unfortunately.
