Homeowners are seldom able to write off their new roofs on their taxes. That’s why roofing contractors often advise homeowners to wait until they sell to gain tax advantages.
Here are a few things you should consider if you want to claim a tax deduction on your new roof.
The IRS calculates your capital gains when you sell your home by subtracting the adjusted basis from the sale price. The basis is the amount you originally paid while adjustments are any improvements that increase the value of your home, such as new roofing.
If you’re the owner of a rental property, you can write off roof repairs as a deduction. However, if you replace your roof, this will be considered as an improvement and not a roof repair. This is because roof replacement adds value to your property.
To recover the cost of roof replacement, you can use the depreciation method used for your property instead of claiming a deduction. It takes either 27.5 or 40 years to write off the entire cost of the new roof depending on the IRS-approved method you use.
According to the definition of the IRS, casualty is the destruction of a property due to a sudden, unexpected event like storms or fire. If your home loses value because your roof was ripped away by a windstorm, you can claim the loss as a tax deduction.
Take note, though, that you have to claim the loss and not the replacement cost. Moreover, you can’t claim any casualty losses for which your insurer reimburses you.
Roof Masters delivers excellent workmanship by using top-quality materials and adhering to industry standards. Our expertise includes roof replacement, roof maintenance and gutter protection among others. Call us at (888) 889-7551, or fill out our contact form to request a consultation. We serve customers in Montgomery County, MD, and the surrounding areas.