Unlike a commercial or a church roof installation, it’s not always clear-cut when you can or can’t claim your brand-new roofing system as a deduction on your 1040 taxes. In fact, many homeowners are not entirely clear on the tax guidelines surrounding this important home improvement, and you certainly don’t want to make any mistakes once mid-April comes around.
Capital Gains for Owned Properties
When it comes to finalizing taxes, the Internal Revenue Service (IRS) will deduct an “adjusted basis” from the sale price of an owned property. You can think of the adjusted basis as your capital, which means it includes everything you paid for your home, including a roof replacement. The final sale price minus the adjusted basis is your total gain, and this is what the IRS will only consider. Unfortunately, this also means you can only file a new roof as a tax deduction after (and should you decide it) you sell it.
If you’re renting your home, the rules are a little bit more complex. In a nutshell, yes, you can claim your new roof as a tax deduction, but not instantly. Roof repairs, for example, can be claimed as a deduction. A full replacement, however, is considered to be an improvement that adds value so it can’t be claimed as a repair and, by extension, as a deduction.
Acts-of-God events like hailstorms or high winds which caused you some loss can be written as a deduction. Remember, however, that if your insurance paid for the repairs, you can’t claim the amount paid out by your insurer.
Learn more about your roof and the finances that surround it from our professionals at Treadlite Roofing, your number one trusted roofing company. Give us a call at (910) 758-2044, or fill out our contact form to schedule a consultation and request a free estimate today. We serve homeowners in Raeford and all nearby areas in North Carolina.