If you’re thinking about a roof replacement or are in the process of replacing it, it’s essential to be well-informed on what implications a new roof can have come tax time. If you’re wondering whether a new roof is tax deductible or if any tax benefits come with a new roof, we’re here to help.
Keep reading to learn more about the impact a new roof can have on your taxes.
We are not providing tax advice. For guidance on your tax situation, you should get in contact with a tax professional.
Key Takeaways
Roof repair expenses for a rental property are eligible for a tax deduction.
New roofs may qualify for a federal tax credit if they meet certain energy efficiency standards.
If a new roof is needed due to a federally declared disaster, you may be able to deduct the cost as a casualty loss on your federal tax return.
Solar shingles qualify for the Federal Solar Tax Credit.
Understanding Tax Deduction and Tax Credit
Keeping records of expenses related to roof replacements is important for tax purposes because these records serve as evidence to support any potential tax deductions or credits related to the replacement.
What are tax deductions?
Tax deductions allow individuals to reduce certain expenses from their taxable income, reducing the amount of tax they owe. For example, if you fall into the 22% tax bracket, a $1,000 deduction could save you $220. Some home improvements, such as roof replacements in some cases, may qualify for these deductions.
What is a tax credit?
A tax credit is an amount of money that taxpayers can subtract directly from the taxes they owe. Unlike deductions, which reduce taxable income, tax credits lower the actual amount of tax owed dollar for dollar. They don't affect what tax bracket you're in, so for example, if a taxpayer would typically save $0.22 for each marginal tax dollar deducted, a credit would instantly reduce the tax liability by the full $1 amount.
Is a New Roof Tax Deductible?
The tax implications of a new roof will largely depend on whether you are using the property as your primary residence or as a rental property.
If you replace the roof of your rental property, you cannot claim it as a tax deduction; instead, you can claim the annual depreciation expense of the new roof. Any roof repairs made at a rental property can be written off as a tax deduction.
However, if you are replacing the roof of your primary residence, the cost of the new roof is not tax deductible. The IRS classifies installing a new roof as a home improvement and considers any costs associated with home improvements on your primary residence as non-deductible expenses. IRS considers a home improvement every project that adds to the value of your home, prolongs its useful life, or adapts it to new uses.
However, there is an exception. If a section of your home serves as a business office, you may qualify to deduct a portion of your roof replacement costs. The IRS permits deductions for expenses associated with the business use of your home, including maintenance and repairs, if they are directly related to your business activities.
To qualify for deductions for the business use of your home, specific criteria must be met. You must use a portion of your home exclusively and regularly for one of the following purposes:
As your principal place of business.
As a place where you regularly meet or deal with clients, patients, or customers.
For a separate structure not attached to your home, in connection with your business.
Regularly for specific storage purposes.
For rental purposes.
As a daycare facility.
Is Tax Credit Available for New Roofs?
A federal tax credit is available for new roofs that meet specific requirements. The tax credit is designed to encourage homeowners to make energy-efficient improvements, which is why not all new roofs will qualify. To meet the requirements for a federal tax credit, your roofing replacement has to be evaluated as an energy upgrade.
How do you qualify?
The eligible roof types are metal roofs with a pigmented coating and asphalt roofs with cooling granules. To qualify for tax credits, the pigmented coating on the metal roof also must meet the requirements of an Energy Star-certified product.
Alongside energy efficiency credits, homeowners can also benefit from the modified and extended Residential Clean Energy credit. Solar roofing tiles and shingles that serve as both solar electric collectors and traditional roofing do qualify for this credit. Additionally, solar shingles can qualify for Federal Solar Tax Credit.
Alternative Tax Benefits for Roof Replacements
Additionally, you may also claim deductions for casualty losses related to your home on your federal income tax return for the loss caused by a federally declared disaster. A casualty loss may occur due to the sudden, unexpected, or unusual damage, destruction, or loss of your property caused by events such as floods, hurricanes, tornadoes, fires, earthquakes, or volcanic eruptions. It's important to note that a casualty does not encompass normal wear and tear or gradual deterioration.
Who Should You Trust to Replace Your Roof?
Whether or not you qualify for a tax-deductible roof replacement, it's important to compare various quotes before choosing the right company for the job. Selecting a reputable and respected roofing company in your area can potentially save you money during the replacement process.
FAQ
Yes, but only if your new roof meets specific energy efficiency requirements. Metal roofs with pigmented coatings and asphalt roofs with cooling granules that qualify as Energy Star products are eligible for a federal tax credit. If you installed solar roof shingles, they can qualify for the Federal Solar Tax Credit.
The cost of a new roof is not tax-deductible unless part of your home is used for business, such as meeting clients, storing business items, rental purposes, or as a daycare facility. In that case, you might qualify for a partial deduction.
Irena is an industry analyst and financial content specialist at Fixr.com, where she transforms complex data into clear insights to help homeowners make smarter financial decisions. With a background in personal finance research and writing since 2018, she brings years of experience in helping readers understand how to maximize their home investments. Her work has been featured on reputable websites, including Washington Examiner, Yahoo Finance, Fox40, and Forbes.