Along with replacing your HVAC system, replacing your roof is one of the most expensive home projects you can face. At the low end of the scale, you’re usually looking at spending $5,000-$6,000. If you choose higher-end materials or have a larger home, the cost can easily rise to $10,000-$20,000 or even more. The high price of a roof replacement is why one of the most common questions we get from homeowners is whether you can write off the new roof on your income tax return. We’ll try to answer that question so that you can understand the ways to potentially save on your roof replacement.
IRS Rules on Home Improvements and Tax Deductions
The IRS has specific regulations when it comes to what you can and can’t deduct from your income tax. While these regulations can definitely be confusing, the main thing to know is that they regard a roof replacement as a general home improvement. Unfortunately, that means most roof replacement projects and roof repairs don’t qualify a homeowner for a deduction or tax write-off. That said, you may be able to claim a deduction if your existing roof is considered a casualty loss, meaning it must be repaired because it suffered damage in a federally declared natural disaster.
There are also some exceptions if the roof replacement can be considered a capital improvement, meaning the purpose of the project is to increase the value of the home. However, this sort of project is quite rare and something you definitely need to discuss with a tax expert before you decide to undertake it. It’s best to be certain whether the new roof will qualify for a tax deduction before you get started.
While a roof replacement normally doesn’t qualify you for a tax deduction, you can potentially earn a federal income tax credit if the new roof meets certain requirements. A tax credit is different from a deduction. Instead of being able to write off some of the cost of the roof, you get a credit that you can put toward what you owe the IRS in income taxes.
ENERGY STAR Tax Credits
Under the ENERGY STAR tax credit program, you can receive a tax credit of up to $500 if you use certain types of energy-efficient roofing materials when replacing the roof on your existing home. The credit is capped at 10% of the cost of the roofing materials only and not the labor costs for replacing the roof, meaning you may not be eligible for the full $500. The credit is also available only if you’re replacing the roof on your primary residence, which is where you reside for more than 50% of the year. There are also different rules if you run a business out of your house. In this case, you may be able to claim a credit on your business’s income taxes instead of your personal taxes.
Which Roofing Materials Qualify for a Tax Credit?
The main requirement to earn a tax credit for replacing your roof is that the roofing materials you use must be ENERGY STAR certified. There are currently several different types of ENERGY STAR-certified roofing materials. This includes some types of standing-seam metal roofing, composite shingles, architectural asphalt shingles, shake shingles, concrete tiles and slate tiles. Some types of roof coatings also qualify for an ENERGY STAR rating.
To earn an ENERGY STAR certification, the roofing materials must be proven to meet the necessary solar reflectance requirement. That is, it must reflect at least a certain percentage of sunlight. The exact percentage of sunlight the materials must reflect depends on whether the materials are being installed on a low-slope roof or a steep-slope roof.
The most important thing to note is that there really aren’t that many roofing materials that meet the requirements and have earned an ENERGY STAR certification. For instance, the only type of metal roofing that qualifies is reflective metal roofing, which has a pigmented coating that causes sunlight to bounce off the roof. Similarly, only shingles that are coated with so-called “cooling granules” qualify, as these granules also make the shingles far more reflective and prevent them from absorbing large amounts of heat from the sun. Shake shingles and roof tiles also must have a reflective coating to earn the certification.
The reason that these materials were chosen is that the reflective coating allows them to keep the house much cooler during the summer. Most types of roofing absorb a huge amount of heat from the sun, and all this heat continually causes the house to get hotter. By reflecting a large amount of sunlight and helping the house to stay cooler, the roofing materials make the home more energy efficient. They reduce how much the house’s AC has to run and how much electricity it uses.
How to Know if Now Is the Right Time to Replace Your Roof
The fact that you can only receive up to a $500 credit for replacing your roof means it’s almost certainly not worth replacing your roof if the only reason you’re doing so is to get the credit. Instead, you need to consider factors like the current condition of your roof and how much longer the existing roofing materials should last. If your roof has some minor issues, you also need to think about whether you need a full replacement at this time or repairs will do. For instance, if there are just a few cracked, broken or missing shingles and the rest of the roof is otherwise in good condition, repair is usually the best option since it will cost much less.
In terms of the overall condition, the most important factor is if your roof leaks or has any issues that make it likely to leak. How much longer your roof may last before you need to replace it depends in large part on the type of roofing materials. If your roof has composite shingles or metal roofing, you can usually expect it to last for 40-50 years.
Even though some asphalt shingles are rated to last 50 years, the majority of them rarely make it for more than 30-35 years. In some cases, you may even need to replace asphalt shingles after only 15-20 years. The reason that you can’t really depend on the manufacturer’s ratings as to how long the shingles can last is that these ratings are based on an ideal scenario. That means the materials experience minimal weathering and the roof never suffers storm damage.
The best way to know if you should replace your roof is to have it professionally inspected. When it comes to roof inspections, repairs and replacements, Jimmy's Roofing is the contractor you can trust. We offer exceptional residential and commercial roofing services in the Seattle, Spokane, Portland and Coeur d’Alene areas. We’re ready to help with whatever you need.
To schedule a roof inspection or learn more about your roof replacement options, contact us at Jimmy's Roofing today.
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