Replacing a roof is one of the most important upgrades for a home. As a homeowner, you must consider the cost when deciding whether to schedule this improvement soon or wait a little longer when your finances are in better shape. Many homeowners are not aware that they can claim a roof replacement as a tax deduction. These benefits can make a big difference in your decision whether to go ahead with the new roof. So, can your new roof be used as a tax deduction?
First, let’s look at the possible reasons for replacing a roof:
Reasons for a Roof Replacement
Normal Wear and Tear – Over time, all roofs will need to be replaced because of the effects of weather and the normal aging process. This replacement will be necessary in 10 to 50 years. This depends on the type of material, whether proper maintenance has been done, and weather conditions in the area.
You are selling your home soon – Sometimes, it may be necessary to replace your roof to pass a pre-sale inspection or to increase the home’s value to realize enough profit from the sale to make another purchase. A new roof is a significant selling point for prospective home buyers.
Improved Curb Appeal – Most homeowners aim to improve their home’s curb appeal. Even if they don’t plan on selling shortly, an attractive home has other benefits. A higher appraisal value can be the difference in getting approved for a home equity loan in the future.
Unexpected Storm Damage – A strong storm can cause extensive damage in a short amount of time. In some cases, it is more cost-effective to replace the roof. The roof system consists of the roofing materials, gutters, underlayment, and various hardware necessary for the job. All these items may be damaged or lost in a storm.
An Addition to Your Home – Sometimes, when you put an addition on your home, the roof cannot be matched exactly, especially if it is older. Replacing the roof can be the best option in this case.
Not all of these conditions will apply when applying for a tax benefit. Now, let’s look at the possible circumstances when there may be tax deductions or credits.
Roof Replacement as a Tax Deduction
Casualties
Fires, storm damage, and catastrophic events such as meteor strikes are in this category. If your insurance company has paid for these repairs, you cannot get a tax benefit.
Depreciation
If you own a home that you use as a rental property, you can apply for this tax reduction. You cannot get an immediate deduction, but you can use depreciation over the years to reduce your taxes. This deduction may be helpful even if you rent out part of your home.
Tax Credits
Tax credits work differently than other tax benefits. You receive a credit to make your home more energy efficient. Don’t confuse this with a home improvement loan. The availability of tax credits changes from year to year.
- Commercial Roof Replacement – Many tax credits and deductions are available to commercial building owners, including waterproofing, upgrading certain roof areas, and many other roof-related constructions.
- Solar Energy System — Solar energy has a host of benefits. However, many homeowners don’t realize that certain roof upgrades necessary to install a solar energy system may also qualify for a tax deduction. If you are considering this option, discuss the possibilities with a professional roofing company. Sometimes, reinforcing parts of a roofing system can be included in a tax deduction.
- Home Office – If you have a home office or area in your home that is used as part of your business, you may qualify for a partial tax deduction on a roof replacement. Talk these options over with your accountant and a certified roofing company.
- Selling your Home – This is a gray area in tax deductions, but worth exploring with an accountant. The IRS may consider a replacement to be a necessary repair and not just an upgrade to sell your home. Get all the details before you start work on the new roof.
Considerations
Tax rules can be confusing, but the rewards can be beneficial. In the right circumstances, it is worth investigating before replacing a roof. Consider using these benefits before putting off a necessary roof repair or replacement. Waiting too long may hurt tax laws, and you risk needing costly repairs before installing the new roof.
Please contact Red Diamond Roofing to discuss a roof replacement or repair for a residential or commercial property. We proudly serve Denver and the surrounding area, along with the Fort Collins area. Our experienced staff will happily answer all your questions regarding roof replacement or any of our other services. Let us make your home or workplace a safe and energy-efficient place for you and your family!
