As a homeowner, you’re going to have to repair and replace parts of your home. This includes your roof. If you’re in the market for a full roof replacement, prices can be a bit high depending on the type of roof you select. For this reason, many wonder whether they can claim a new roof as a tax deduction to offset some of the cost. We have created this guide to help you understand the process.
Please note: The information provided in this article is for general guidance only and may not apply to your unique circumstances. Tax laws are subject to change, and eligibility for deductions or credits can vary. We strongly recommend consulting with a licensed tax advisor or financial professional to determine the best course of action for your roof replacement or energy-efficient upgrade.
Claiming a Roof Replacement Through Casualty Loss
Severe storms are becoming more common in the United States. Events like hurricanes are also becoming more intense. Severe weather accounts for billions of dollars in damages in Texas alone, which is why many residents look to the government to help recoup some of the cost. According to the IRS, if there was damage to your property because of sudden or unexpected weather, then you may be able to write off some of that loss from your federal income taxes.
- Earthquakes
- Landslides
- Storms
- Volcanic eruptions
- Windstorms
- Tsunamis
- Hurricanes
- Floods
While theft, vandalism, or burglaries won’t typically affect your roof, you can write off damages from accidents, riots, or terrorist attacks. One of the benefits of a casualty loss write-off is that it can let you get money back for damage or the cost of an entire replacement. This is useful should the storm or qualifying event damage your roof past repair.
Claiming a Roof Replacement as a Capital Improvement
A capital improvement is an expense used to replace an item like a roof. The expense must add value to the property, prolong its useful life, or adapt it to new uses. Unlike casualty loss, repairs are not tax deductible. Capital improvement only works with full roof replacements. The criteria for capital improvement also require that the roof replacement be a direct upgrade. It needs to add value to the property.
This is essential when seeking a new roof. For example, if your current roof is a gable style and uses asphalt shingles, you can expect it to last anywhere between 20 and 30 years. If you want to upgrade to a roof with an even longer life expectancy, like a standing-seamed metal roof that lasts more than 50 years, that would be a capital improvement.
With a capital improvement, you won’t be able to make the deduction on your taxes the year you make these improvements. These are instead added to the cost basis of the property, which directly reduces the taxable gain when you sell the property.
Roof Replacement Through Energy-Efficient Roof Tax Credits
Another way to receive substantial tax benefits is to take advantage of the federal government’s Energy Star roof tax credit. This is a tax credit designed to encourage homeowners to invest in eco-friendly roofing solutions. As the name implies, the roofing materials covered by the credit are all Energy Star-certified.
This means that they meet the standards set forth by the Environmental Protection Agency (EPA). Effectively, these roofing options reduce energy consumption and promote sustainability. Before you try to submit for this tax credit, it’s critical that you verify that the roofing product you’re selecting falls under the guidelines set by the EPA. This means that they need to be Energy Star certified for increased energy savings. It’s also essential that you keep your documents and records and potentially seek tax guidance.
Some of the roofing options that meet the EPA’s requirements are:
- Some roof coatings
- Metal roofing
- Concrete tiles
- Slate roofing
- Asphalt shingles
- Clay tiles
The Solar Investment Tax Credit
The Solar Investment Tax Credit, which the government also calls the investment or input tax credit (ITC), allows you to receive a tax credit when using solar energy systems on your roof. This is a sizeable tax credit since the government will credit you up to 30% of the installation cost of the system.
This tax credit is available to both commercial and residential owners, and the 30% number will stay at that level until 2033. Once that year comes, the credit will drop to 26%. This credit also rolls over, which means that if you don’t have the bill in the year of the installation, you can still receive the credit in the next year. You simply must own the solar energy system to get this credit, so those with solar leases or PPAs won’t be eligible. This is an incentive that is designed to help reduce carbon footprints across the nation.
Now that you understand the Solar Tax Credit, you should understand the solar roof building materials available. Here’s a breakdown of the three most popular options.
Solar Roofing Tiles
These are interlocking photovoltaic panels that cover the surface of the roof. They differ from solar roofing shingles because they are intrinsically built into the roof and aren’t simply attached. Like any form of solar energy-gathering technology, sunlight hits the photovoltaic tiles and generates electricity through a chemical reaction. This type of roof tiling has the potential to reduce energy costs by between 40% and 60%.
When it comes to solar tiles, our team at KPost Company is experienced with installing this technology. Since these are part of the roof’s construction from the start, you can consider these tiles when needing to replace your roof. Wired tiles send solar-generated energy into your home using a power distribution board.
Solar Roofing Shingles
Like solar tiles, solar shingles use photovoltaic technology to chemically create electricity when they bathe in sunlight. The main difference is that the installation of solar shingles on an existing roof looks like more reflective variations of traditional asphalt or slate shingles. Since they are incorporated into preexisting roofing structures, roofing experts refer to them as building-integrated photovoltaics (BIPVs).
These types of shingles have the benefit of being more durable than many roofing materials and may last longer. They also come in two distinct varieties: silicon and copper-indium-gallium-selenide solar shingles.
Solar Roofing Panels
Unlike the other two options, solar roofing panels aren’t integrated into the superstructure of your roof. These are installed atop the existing roof, which means that they are an easy upgrade since you’re just having them placed and wired in. These aren’t as aesthetically pleasing as other types, but they are a simplified photovoltaic system that’s inexpensive to incorporate.
You Can Use Tax Codes to Reduce the Cost of Roof Upgrades and Replacements
It is possible to better balance the cost of roofing with tax codes. At KPost Company, we provide all the roofing services and technologies to get your new roof up and running on your home. We have several material options for roofing as well, including slate, tiles, metal, synthetic, and TPO.
At KPost Company, we are a top roofing company in the area of Dallas, TX. Give us a call today, and our team will set you up with a consultation that will get you started with a new roof.
