Efficient Commercial Roof Tax Incentive Bill Introduced

Bipartisan legislation to incentivize energy efficient commercial roof replacements was introduced in the past week by Rep. Tom Reed (R-N.Y.) and Sen. Ben Cardin (D-Md.) and cosponsors. The bill, the “Roofing Efficiency Jobs Act of 2011” (H.R. 2962 / S. 1575) , would accelerate the depreciation period for certain replacement roofs that include increased insulation and, in most warmer parts of the U.S., feature reflective coatings to reduce absorption of sunlight (“cool roofs”).

Business income taxes allow property investments to be claimed as a business expense (thus reducing taxable profits) only slowly over a number of years.  How many years varies by type of property, based roughly on how many years the property is expected to last; for roofs this is normally 39 years. So, in simple terms, each year 1/39th of the cost of the roof could be claimed as a tax deduction. This proposed measure would accelerate that depreciation schedule, shortening it to 20 years for eligible roof systems. As such, businesses could recoup the tax benefit more rapidly; this would make such an investment more attractive financially.

To be eligible for this accelerated depreciation, the new roof system must meet the requirements of the ASHRAE Standard 189.1-2009, a reach code based on the ASHRAE 90.1standard, but with more stringent insulation requirements. For example, buildings in the far south of the country would need an R-20 roof to qualify, while those in the far north would need R-35. Additionally, for roofs in all but the coldest parts of the country (climate zones 1 to 5, or roughly everywhere at least as warm as Chicago or Boston), roofs would need a qualifying cool roof reflective surface to reduce solar heat gain and the urban heat island effect. Buildings would have to have been completed in 2009 or earlier to be eligible for this retrofit incentive and the roofs would have to be close to horizontal.

In the Senate version of the bill, this incentive would expire at the end of 2013; the House counterpart has no expiration. Otherwise the two bills are substantively identical.