Is Roof Replacement Tax Deductible?

Being a homeowner comes with the responsibility of keeping your property in good condition at all times. Renovating or making improvements to your home or apartment is important for the safety and security of your family. Even when you are planning to sell your home, you’ll need to improve it from every angle to attract potential buyers. Since roof replacement is a part of home improvement, you may ask yourself whether you can deduct the cost of the new roof from your annual taxes. Being eligible for tax credits can be beneficial for homeowners.

When filing taxes, home repairs and home improvements are treated as two different entities. It is important to understand what each of these terms means and how tax deductions apply in each case.

So, let us delve deeper into the topic of roof replacement and find out whether you can deduct from or write it off on your taxes.

What is Home Improvement?

In a general sense, improving the condition of a home or apartment can include so many repair or replacement tasks. However, in regard to tax deductions, this means making upgrades that extends the life and the value of the property. Therefore, don’t think of home improvement as a quick repair or small fix that you may get done from time to time in your home.

Unlike home repairs, home improvements are expensive and they add significant value to the property for several years in a row.

Home improvement includes enhancing or redesigning an existing space for new use. If you add a new space or object to your home, this will also fall under the home improvement category. Making upgrades to an existing space or object in your home or apartment is also considered home improvement. Typical examples of replacing a roof or installing a new roof, renovating the kitchen and remodeling the bathroom are some typical examples of home improvement.

What is Home Repair?

As per the definition of IRS, a home repair isn’t a considerable addition or upgrade which enhances the life of the property. If you get a repair done in your home, it is included under maintenance tasks.

If a space or object in your home has some minor issues, you can fix the issue with a quick repair. Such repairs are not expensive  and they don’t actually add years to the life of your home or property. If you replace a couple of damaged asphalt shingles in your roof, it is a repair. Likewise, getting a room repainted and repairing a kitchen appliance are also included under home repairs.

Tax Deductions: Roof Replacement vs Roof Repair

In light of the distinctions drawn between home improvements and home repair, it becomes easy to understand how roof replacement and roof repair will impact your tax deductions. Small repairs such as painting a room or repairing only a small section of your roof don’t qualify for deductions.

Installing a new roof is something which improves the quality of your house, and so it is considered a home improvement. A new roof built with high quality materials will add value to your home for many years in future. So, you can deduct the cost of a new roof from your annual taxes. However, you can’t deduct the entire cost at once. Instead, you’ll need a depreciation schedule, which refers to dividing the cost over the useful life of the improvement. Then, you’ll be able to avail yourself of tax deduction benefits on the current year’s expense. 

So, if you are getting a roof replacement, you may qualify for tax credits. However, you should make sure that the roofing material used in your roof is certified metal or asphalt with pigmented coatings or cooling granules. Such roof replacements help homeowners reduce heat gain and make the home more energy-efficient. But keep in mind that labor costs of roofing will not be covered.

What If I Operate a Home Office?

If you run a home-based business or work from a home office, then you can get tax deductions for business-related expenses. For example, if you install a new roof over your house, the roofing cost of the section which covers your work area or home office can be deducted from your annual taxes.

If you have rented out a certain part of your home to someone, then the expense of reroofing that area will be deductible too. 

Roof Replacement Tax Deductions When Selling Home

There are tax deductions available even when you are selling your home. Whether it is roof replacement or any other home improvement task, you need to keep track of all such expenses. To avoid any kind of unnecessary tax burden, you should create a folder or use a software where you’ll record the costs of all home improvement tasks done while you owned the property.

This should be kept in mind that there are no tax deductions on the losses you incur during the sale of a primary residence.

If you are an individual or a couple who have lived in a home for a period of 2-5 years, some part of the profit that you make out of selling your personal residence will be tax free. For further details in this regard, you should check out the tax laws and rules as they apply now in your state.

How to Deduct a Roof Replacement

There is a set depreciation schedule that you’ll need to follow for deducting the cost of a new roof, as mentioned above. 

Let’s say the cost of your roof replacement is $8,000. So, how will this expense be deducted from your annual taxes? Using a 10-year model, the total cost of your new roof will be divided by 10 years. This means that you’ll be able to deduct the expense over a period of 10 years – claiming $800 each financial year for the next 10 years. Here, we used a 10-year model. In the same way, you can use other models in keeping with the useful life of the new installed roof.

All the information we shared above in connection with roof replacement tax deductions are general guidelines as per our work experience as a roofing contractor in and near Lakeland. We are not enrolled agents or tax accountants. For accurate and up to date information on your roof replacement tax deductions, you should seek the expert consultation of a certified accountant.

Need Roof Replacement?

If you are in need of a new roof, reach out to HANDAL’S ROOFING now for your free consultation and estimate. Our experts will thoroughly examine your roof problem and then recommend the most ideal solution for a new roof and adding value to your home for years to come.