New Roof in 2021-Asset or Home Repair?

[mysgyn]

I had originally put in my new roof cost as a home repair for my home business and got a nice refund amount for it.

Then I was told the roof should be put in Assets for depreciation but when I did, I lost that big chunk and instead got $3 back.

Is Assets really where I should be putting this and not in repairs?

Is there a long game here?

[ThomasM125]

It should be listed as an asset.

A roof replacement is not an expense or repair, but you may be able to treat it as such for a commercial building in 2021, but not if it was for a residential property.  You can write if off over it's estimated useful life if it was put on a residential house or unit. For a commercial property, you can elect section 179 depreciation which may allow you to write off the entire cost in the year you have it installed.

[mysgyn]

I'm self-employed and have an at home business. A roof was listed as one of the things that you could list for home repairs and improvements. And then it would take the portion or percentage of the house. But then when I got to assets it also listed the roof as an example...

[ThomasM125]

@mysgyn If you repaired your roof, it would be a repair. But if you replaced it, then it would not be a repair but would be an improvement, which is an asset.

[Opus 17]

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@mysgyn wrote:

I'm self-employed and have an at home business. A roof was listed as one of the things that you could list for home repairs and improvements. And then it would take the portion or percentage of the house. But then when I got to assets it also listed the roof as an example...

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A repair restores the property to as-was condition or maintains it in its current condition, like repairing a hole caused by a tree branch falling on the roof.  An improvement is something that increases the value of the property or extends the useful life of the home or one of it's subsystems.  A replacement roof (new 15-year shingles, etc.) is an improvement that increases the value of the property or extends the useful life of the roof.

As an improvement, the value is added to your home's cost basis, which may reduce your capital gains when you sell.  Then, you can deduct depreciation on the portion of the roof allocated to the home office over 39 years. 

[mysgyn]

OK so in short, since it is a brand new whole roof (not just a spot repair), just add it as an asset?

If so, thank you all for your advice 🙂