Are Roof Repairs Tax Deductible?
You just cut a check to a roofing company and, wise homeowner that you are, are looking for a way to get the most benefit from your expense. It’s only normal to wonder, “Are roof repairs tax deductible?” Like most tax-related questions, the answer isn’t as clear-cut as you’d like.
Leaky Roof Repair
The IRS treats repairs and home improvements differently. In the IRS’s eyes, a home repair is any expense made fix broken or deteriorating parts of your home. These expenses aren’t tax deductible in any way. Fixing a leaky roof clearly falls under the tax man’s definition of a home repair, and won’t give you break on your next tax bill.
Replacing A Roof
The IRS treats home improvements a little differently. A home improvement is any investment you make that improves the condition of your home, or brings it back up to the condition in which you purchased it. In most cases, putting a new roof on your home qualifies as a home improvement, which can help lower your taxes … but just not next April 15.
Further confusing matters, it’s not a deduction you can claim like your mortgage interest or charitable contributions. It’s considered part of the “basis” of your home (essentially, the cost of your home’s purchase plus the expense of all qualifying improvements), that’s used to tally your capital gains taxes when you sell your home. In briefest terms, if you spend $3,000 putting a new roof on your home, it makes your home’s cost increase by $3,000 in the eyes of the IRS.
Unfortunately, you’ll only be able to capitalize on this expense when you sell your home (so save all paperwork), and not in the year you pay for the roof. What’s more, homeowners don’t pay gains on the first $250,000 in profit of your home, and double that if you file married. So unless your home appreciates more than $250,000 before you sell it, the cost of your roof improvement is meaningless.
Don’t scoff at the $250,000 mark! Colorado’s home prices are skyrocketing, and many homeowners who have been in a home for several years may be facing selling a home that exposes them to capital gains liabilities.
Are roof repairs tax deductible? There’s no quick and easy answer, but most homeowners (not owners of rental properties) are always best served holding onto documentation for improvements such as a new roof.