Replacing your commercial roof can be an expensive proposition, so it pays to research potential incentives that can help offset the cost. Commercial building owners in Wisconsin can take advantage of several incentives for roof replacement, which helps to soften the financial burden.
Energy rebates
Commercial building owners can receive energy incentives through Wisconsin’s Focus on Energy program. Incentives are provided based on improving building energy efficiency through various means, including roof replacement. Consult with a Trade Ally for more information about these incentives and how to qualify for them.
Section 179 tax deductions
Building owners who make energy efficiency upgrades may be able to claim a tax deduction under IRS Code Section 179D. Eligible improvements include lighting, HVAC, and building envelope (including the roof).
Energy efficiency upgrades must be part of a plan to reduce total annual energy costs by 25% or more in comparison to a reference building meeting the minimum requirements of Reference Standard 90.1 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE).
The amount that can be deducted is the lesser of the cost of the installed system or the maximum saving per square foot (as calculated and indexed annually for inflation). See the IRS webpage “Energy efficient commercial buildings deduction” for more information and how to calculate the deduction amount.
You may also be able to take a tax deduction equal to the cost of your roof (subject to limits) without the energy efficiency requirement under Section 179. This would allow you to deduct the total cost of a new commercial roof in the first year, providing significant tax savings.
Adding solar power to your roof
Since solar panels have a long lifespan, it’s essential to ensure your roof is in good condition before installing them. Many owners choose to replace their roof at the same time they’re upgrading to solar to ensure they won’t need to make repairs in the future. Here are some incentives designed to help with the cost of installation a solar power system:
Federal tax credits
The Investment Tax Credit (ITC) enables businesses to claim a dollar-for-dollar tax credit worth 30% of the cost of adding solar to a building.
You may also take advantage of the Modified Accelerated Cost Recovery System (MACRS) or accelerated depreciation. Instead of deducting the cost of a solar system over a long time, you can do so in just five years, shortening the project’s payback period. Note that it’s only applicable to the amount over and above what you deducted under the ITC.
Wisconsin’s Focus on Energy Program
Wisconsin’s Focus on Energy Program offers incentives of up to $300,000 for renewable energy projects, including biogas, biomass, solar, and wind. Commercial building solar installations can earn $50 per kW up to a maximum of $25,000 for 2025.
Milwaukee Shines
The Milwaukee Shines program encourages homeowners and business owners to install solar power systems on their buildings as part of the city’s effort to create cleaner air and reduce energy costs. The program provides local funding sources through PACE loans.
Property assessed clean energy (PACE) loans
Property assessed clean energy (PACE) loans are available statewide for building envelope and renewable energy projects. These loans offer long-term, fixed-rate financing to building owners and are considered a property tax assessment. They provide 100% project financing up to 20-30% of the property’s value.
Please note that laws and tax codes are subject to regular changes, so it is advisable to consult a tax consultant for the most up-to-date information on current tax incentives.
For incentives such as energy rebates, the New Roofs Inc. team is here to help with the latest information. We can help determine your eligibility and let you know the cost of roof replacement. Reach out to our team today to get started.