Roof replacement: 27.5 or 39 years
A new roof is a structural component of the building under Reg. § 1.48-1(e)(2). Structural components are depreciated over the same life as the building itself: 27.5 years for residential rental property, 39 years for nonresidential. The mid-month convention applies in the year you place the roof in service.
Roof replacement is a capital improvement, not a deductible repair. Under the IRS tangible property regulations (Treasury Decision 9636), a betterment, restoration, or adaptation of a unit of property must be capitalized. A complete re-roofing restores the roof component and must therefore be capitalized and depreciated.
HVAC systems: residential vs. nonresidential
For residential rental property, an HVAC system is typically a structural component depreciated over 27.5 years. For nonresidential property, certain qualified HVAC systems placed in service after 2017 may qualify as Qualified Improvement Property (QIP), which has a 15-year MACRS life and is eligible for bonus depreciation. The distinction depends on whether the system serves the interior of an existing nonresidential building.
A cost segregation study can sometimes reclassify components of an HVAC system — controls, distribution hardware, or dedicated process cooling equipment — as 5-year or 7-year personal property, accelerating depreciation further.
Partial asset disposition
When you replace a roof or HVAC, you may be able to write off the remaining adjusted basis of the old component using the partial asset disposition election under Reg. § 1.168(i)-8. This requires that you track the cost basis allocated to the old roof or HVAC system at original purchase, which is easier if you have a cost segregation study from acquisition.
Frequently asked questions
Can I immediately deduct a new roof as a repair?
No. A complete roof replacement is a capital improvement that must be depreciated. Minor patching of an existing roof might qualify as a currently deductible repair, but a full replacement does not.
Does a new HVAC qualify for bonus depreciation on a residential rental?
Generally no. Residential rental building components (including HVAC) are 27.5-year property, which does not qualify for bonus depreciation (only property with a MACRS life of 20 years or less qualifies).
What if I replaced the roof before I bought the building?
The cost is capitalized into your purchase price and depreciated over 27.5 or 39 years starting from your placed-in-service date.
Sources
- IRS Publication 946 — How to Depreciate Property
- IRS — Cost Segregation Audit Techniques Guide
- IRS Publication 527 — Residential Rental Property
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.