The Roofing Resource Blog

Residential and Commercial Roofs and Taxes

Wed, May 21, 2014 @ 04:51 PM | Exterior Pro Roofing

Some interesting information that we have come across and decided to check into it a little more is tax, do you get to deduct the cost of a new roof? This is a good question to ask that many people probably think about and we do not want customers to feel they shouldn't ask these questions. Commercial building owners probably turn this over and the accountant or CPA do what they know can be done with this. But what is it that we can do with the money we pay out on a new roof? While we are not tax experts, we did find a few articles that might be helpful and we advise customers to seek a CPA to answer these specific questions regarding taxes.

The IRS website by no means is easy to find anything but it is there if you like taking the time to research, but we also got a snap shot of the allowable ways to be able to use that cost you pay for a roof to use. This is different also for a residential and commercial, and there is still more debating with the IRS as to the regulations and clear understanding of this but so far this is what they say. There are tax credits that are very specific on roof replacements, which go more into detail with energy efficient. This would be a good question to ask and again a CPA or Certified Tax Professional or even the IRS themselves would be the appriopriate parties to ask. 

For residents there is an adjusted basis which is explained in more detail in the picture below. You have a basis for the your home in which condition you bought it originally, and any changes can increase or decrease your basis, you need to track your basis for when you sell your home, or begin depreciating because of use for business or use as a rental. So your basis is what you paid for your home and then any adjustments as shown in the figure either increase or decrease your basis. So a new roof is an improvement to the condition of your home and it will increase your basis. While you cannot deduct these costs, you are adding to the value of your home.residential bldg


For commercial buildings owners its different, there are capital expenditures and deductible repairs. There is still much debate with the IRS on this topic and we have heard that possibly when a roof is replaced and old one disposed of there is now an option of taking a retirement loss for the old roof. So the replacement roof must be capitalized but the old roof can be a retirement loss claimed. We could not find this on the IRS website but we did find an article on capitalization and deductible repair costs The way it is looked at is that repairs are considered keeping in the same condition, where improvements are making the condition better or newer and the improvements are capitalized. So you do get to deduct repairs but there is such a debate on what the IRS considers repairs and improvements. Below is a table from the article.commercial bld

This would be some good research to look into for those that wonder if you can deduct costs that you do for your home or building. While roofing contractors do not deal with this aspect, we figured those that are wondering about questions like this, that you are asking a good question and contacting a CPA will benefit so that you have a better understanding. We do not get asked this often, but this has come into topic a few times and we want to help our customers the best that we can.