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Maintenance

At Guycan Ltd., we understand the need to protect your assets. When a storm hits, a quick response is a must for a roof repair. We have on staff repair crews ready to respond within 24 hours of your call. Our team is experienced in single-ply (Duro-Last, TPO and EPDM) and asphalt systems (Built-up, Modified, Torch-applied Modified).
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Preventative Maintenance

For many building owners and managers, the roof is the capital asset that offers the greatest potential for savings and return on investment for years to follow. At Guycan Ltd., we believe your roof system investment, like all other important capital assets, should be carefully managed. Below are frequently asked questions by our interested clients:
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Is preventative maintenance really necessary?

Yes. Preventative maintenance is vitally important to the life of your roof. A building is only as good as its roof, and the roof is only as good as the care and maintenance you provide for it. Repairs are inevitable at times, however, a repair that could have been prevented is much more costly than a good regular maintenance plan.
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Forecasting roofing costs and potential problems is notoriously difficult. More than 25% of all roofing dollars are spent on unplanned repairs. If you own multiple properties in varying locations and numerous property managers, you understand how difficult this can be and how your costs grow exponentially.

Isn’t my warranty all I need?

Not always. Be aware that roof warranties do not cover routine maintenance. Building owners and managers often incorrectly assume that their roof systems are protected by manufacturer’s warranties. In fact, this protection is severely limited by a long list of exceptions and exclusions which are carefully spelled out in the fine print of your warranty. Experienced roofing contractors estimate that fewer than 5% of roof system damage claims meet the stringent requirements set in the industry – standard warranties.
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Protect your investment by prolonging the life of your roof. Maintenance and repairs managed by Guycan Ltd.’s skilled personnel incorporate the most important aspects of roof management including: preventative maintenance, emergency response, and disaster response. Whether your roof is under warranty or not, your roof needs continuous care. The investments you have made in your roof and your assets beneath your roof need to be protected.

How does maintenance and repair affect me at tax time?

There are so many roofing materials, procedures and concepts offered today that the decision of choices can be quite broad, even when you just have a simple leak. One option is to patch the leak and try to get by, and another is to completely tear off the old roof and replace it with new insulation and roofing materials, not to mention the plethora of options between these two extremes. Some of these options include preventative maintenance procedures designed to restore the old roof to a watertight condition for an extended period of time.
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Debates as to the best way to fix a given roof are what give the roofing industry its validity. All too often however, such discussions are limited to roofing technology and the total cost. Little attention is actually given to the total cost after taxes. When the tax ramifications are taken into account, a strong argument arises on behalf of preventative maintenance options.
Under the Internal Revenue Code, expenditures for the business property are tax deductible expenses, which may be written off in the current tax year. Conversely, expenditures that constitute capital improvements must be amortized over the life of the property and are recoverable only through annual depreciation deductions. In either case, the amount expended will be recovered through deductions, but the difference is the period of time over which the deductions are spread. Currently for roofing assets are recovered over 39.5 years. Clearly a major tax advantage is available to the building owner if they can treat the cost of fixing the roof as a current expense rather than depreciating the cost over 39.5 years.

Not all roofing specifications will receive equal tax treatment. How the work is performed will dictate whether the cost can be written off in the current year or must be capitalized. Determining whether a given expenditure qualifies as a current expense or capital improvement is not always clear, but the Supreme Court in Welsh V. Helvering has offered the following guidelines:

“A repair is an expenditure for the purpose of keeping the property in an ordinarily efficient operating condition. It does not add value of the property, nor does it appreciably prolong its life. It merely keeps the property in its operating condition over its probable useful life for the used for which it was acquired. Expenditures for that purpose are distinguishable from those for replacement, alterations, improvement or additions that prolong the life of the property, increase its value, or make it adaptable to a different use. The basic repair is a maintenance charge, while the others are additions to capital investments, which should not be applied against current earnings.”
In applying this standard, the tax authorities and courts have consistently treated the cost of a new roof as a capital expenditure, but the cost of repairing the existing roof as a current expense. On the other hand, where the contractor has merely patched the leaks, the cost is clearly a current expense.

Many roof projects however, go well beyond mere patchwork but stop short of tearing off and replacing the old roof. There are many products and processes that have preventative maintenance quality. They are designed not only to repair existing leaks but also to prevent the occurrence of the additional leaks. Examples include asphalt based repair products and numerous roof coatings with different levels of performance. None of these products would serve as complete roofing but all go beyond merely patching the existing roof.

Should the building owner treat preventative maintenance costs as a capital expenditure or a current expense?

If we go back to the Supreme Court guideline, the answer to the question lies in whether such costs increase the value of the property or extend the useful life. In 1967, the Tax Court addressed this issue in the Oberman Manufacturing Co. In that case, Oberman had taken a $20,791 expenditure as a current expense on their roof in Fayetteville, Arkansas. The IRS had taken the position that the cost should be capitalized. In ruling in favor of Oberman, the court found that the company’s only purpose in having the work done to the roof was to prevent the leakage. The court further emphasized that there was no replacement or substitution of the roof and that this was the economical way to repair the leaks and keep the property in an efficient operating condition.

As to whether the expenditure increased the value of the property, the court acknowledged that the property is more valuable once the roof is repaired but the proper test is to whether the expenditure materially enhanced the value, use, life, expectancy, strength or capacity as compared with the status of the asset prior to the condition necessitating the expenditures.

Where the owner selects a preventative maintenance process for his roof, it would be proper for him to treat such expenditure as a current expense. His sole purpose is to stop the leakage and return the building to a watertight condition. The life value of the building has not been materially enhanced. The old roof has not been replaced or substituted for new insulation and roofing.

Treating preventative roof maintenance as a current expense is an aggressive tax position that might well be questioned by the IRS in the event of an audit. Nonetheless, the position is legally strong and ought to prevail. Once made aware of the tax advantages of preventive maintenance, the building owners attitude will change drastically. Rather than bemoaning the fact he is confronted with a large and unexpected expenditure, they will see that their roof work will serve not only as a rain shelter but as a tax shelter as well.

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Testimonials

  • Olympia Tile & Stone office and flagship showroom facility was covered with an aging and deteriorating roofing system, and the leaks had begun to disrupt daily business operations. Olympia needed an immediate fix. According to Guycan’s Roof Consultant “with a built-up system, we would have needed to postpone the project until spring when the snow and ice melts. Olympia Tile could not afford to wait because the current roof wouldn’t withstand another winter season. Leaks were already causing damage to their product inventory. Despite challenging weather conditions, including cold temperatures, high winds and record snowfall; Guycan was able to install the Duro-Last roofing system in 28 working days. Guycan has installed another Duro-Last roofing system at an Olympia showroom location in Ottawa (10,000 square feet) and are working on other locations for Olympia.

    Olympia Tile & Stone

  • Kleen-Flo Tumbler Industries Limited had a roof that was over 30 years old, and needed constant repair to keep from leaking. Guycan’s repair service was able to contain the leaks, and keep the problem from worsening. Sukhdev Mann was so impressed by the prompt service; he decided to hire Guycan for the 85,000 sq.ft. re-roofing project. Guycan was able to install the Duro-Last membrane in 4 weeks with no disruption to Kleen-Flo’s daily operations. Sukhdev was impressed not only by the workmanship Guycan was providing, but also by the unique relationship he was able to build with Guycan owners Randy and Jason Deonarain. When it was time for Kleen-Flo to install solar panels, Guycan was the only solution.

    Kleen-Flo

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