Understanding Roof Types and Their Role in Cost Segregation Studies

Roofs are one of the most essential components of a building whether residential or commercial. Beyond their primary function of protecting the structure from the elements, roofs play a significant role in real estate investing, construction decisions and most importantly for property owners' tax strategy. In this article, we’ll discuss the different types of roofs found in residential and commercial properties and explain how they factor into cost segregation studies to accelerate depreciation and boost cash flow.

Important Insights

• Roofs usually depreciate over 27.5 or 39 years.
• Some roof systems may qualify for tax-saving strategies.
• Cost segregation clarifies roof classification for taxes.

Table of Contents

• Residential Roof Types

1. Asphalt Shingles
2. Metal Roofs
3. Clay and Concrete Tiles
4. Slate Roofs
5. Wood Shingles and Shakes

• Commercial Roof Types

1. Built-Up Roofing (BUR)
2. Modified Bitumen
3. EPDM (Rubber Roof)
4. TPO and PVC Roofing
5. Metal Roofing

• Where Do Roofs Fit in a Cost Segregation Study?
• Exceptions and Strategic Considerations
• Final Thoughts

Residential Roof Types

Residential roofs come in a variety of shapes, styles, and materials, each offering unique benefits in terms of durability, aesthetics, and cost. Here are some of the most common types:

1. Asphalt Shingles

The most popular roofing material in the U.S., asphalt shingles are affordable, easy to install, and offer decent longevity (15–30 years). They come in various colors and styles to match different architectural designs.

2. Metal Roofs

Metal roofing has become increasingly popular due to its durability and energy efficiency. It can last 40–70 years and reflects solar heat, which can help reduce cooling costs.

3. Clay and Concrete Tiles

Found often in southwestern and Mediterranean-style homes, these tiles are heavy but extremely durable. They resist fire and rot but typically come with a higher upfront cost.

4. Slate Roofs

Slate is one of the most durable roofing materials available, with lifespans of 75–100 years. It’s also one of the most expensive but adds a distinct, upscale aesthetic.

5. Wood Shingles and Shakes

Made from cedar, redwood, or pine, wood roofs are prized for their natural look. They require more maintenance and are not always allowed in areas prone to wildfires.

Commercial Roof Types

Commercial buildings have different roofing needs than homes due to their size, shape, and usage. Here are the primary types used in commercial settings:

1. Built-Up Roofing (BUR)

A traditional method made by layering tar and gravel. BUR systems are cost-effective and durable but can be heavy.

2. Modified Bitumen

This asphalt-based material is rolled out in sheets and fused to the roof. It's known for being tear-resistant and ideal for low-slope roofs.

3. EPDM (Rubber Roof)

A durable synthetic rubber membrane, EPDM is lightweight, easy to install, and weather-resistant, making it ideal for flat roofs.

4. TPO and PVC Roofing

These thermoplastic roofing systems are popular for their energy efficiency and resistance to UV rays and chemicals. They’re often white, helping reflect sunlight and reduce cooling costs.

5. Metal Roofing

Like in residential applications, metal roofs are used for commercial buildings thanks to their long life and sustainability. They work well on steep-slope roofs.

Where Do Roofs Fit in a Cost Segregation Study?

Roofs are generally considered structural components, meaning they fall under Section 1250 property and are depreciated over 27.5 years for residential or 39 years for commercial properties. This makes roofs one of the items not eligible for accelerated depreciation under cost segregation, unlike carpets, cabinetry, and specialty electrical.

Exceptions and Strategic Considerations

While the main roof structure must be depreciated over the full life of the building, certain roof-related systems or upgrades may qualify for faster depreciation:

• Removable or specialized roofing systems used in tenant-specific installations might be reclassified.
• Green roofing systems or solar panel installations could qualify for special incentives or shorter recovery lives.
• If a partial roof replacement is done during ownership, this may trigger a disposition deduction for the retired portion, which can provide a substantial write-off.

Additionally, cost segregation studies help identify and properly allocate roof costs, ensuring compliance and maximizing tax efficiency.

Final Thoughts

Whether you're investing in residential properties or managing commercial buildings, understanding your roof’s material and structure is not only important for maintenance and durability—but also for tax planning. A detailed cost segregation study can help ensure that all building components are properly classified and that you're taking full advantage of every deduction available.

Even though roofs are typically long-life assets, their role in a study is still crucial for proper allocation and planning for future improvements. By working with experienced cost segregation professionals, you can navigate the complexities and unlock hidden value in your property investment.