Fixing a leak, roof repair, and roof replacement can all be expensive, time-consuming processes. If you are thinking about making any of these repairs or improvements, you might be wondering what is and isn’t tax-deductible. If you rent out a room or use part of your house as a home office, these questions become even more complicated.
Home repairs and improvements receive different treatment under tax law. Knowing the difference between the two and how to take advantage of any tax breaks you qualify for can help to make your investment even more worthwhile.
The Relationship Between Home Improvement and Taxes
In most cases, home repairs aren’t eligible for tax breaks. However, home improvements which substantially increase the value or usefulness of your home do qualify for deductions.
If you make a home improvement which restores part of your home to “like-new” condition, it will be considered a capital improvement. In most cases, you won’t be able to collect on this in the upcoming tax years. Instead, you’ll be able to add the cost to the tax basis of your home, which can reduce your tax obligation during any future sale.
How Do I Reduce My Tax Obligation on These Home Improvements?
Single homeowners can deduct the first $250,000 in profits from the sale of their home, and married couples can deduct the first $500,000. In the past, it was necessary to keep all receipts for home improvements to determine the adjusted basis of your home, but in recent years this practice has fallen out of favor. Given the amount of profit which is exempted from taxation, most homeowners can safely ignore tracking the cost of qualifying home improvements. However, it may become necessary to keep records of expenses if your home greatly increased in value during the time you owned it.
Can I Deduct My Roofing Repair Costs?
In most cases, repairing a leaky roof or changing out your storm gutters won’t be enough of an improvement to qualify for a tax deduction. These are considered part of normal maintenance and do nothing to increase the value of your property. However, a new roof, air conditioning system, or any other roof improvement could qualify for a deduction. Solar arrays can qualify for tax benefits as well, in addition to the energy savings they can offer.
Using Roof Repairs as Deductions When Your Home Counts as Income
However, there are two exceptions to this rule. If your rent out your home or use part of it for your business, you can deduct repair costs equal to the percentage of your home which is dedicated to either use. If you must make a repair which only affect the rooms in question, you can deduct the full cost of the repair, which is considered a form of depreciation. This can help reduce your tax burden when you decide to sell your home. However, be sure to consult with a tax professional before making any decisions.
Repairing your roof won’t save you money on your taxes, but is essential to preserve the value of the rest of your home. Regular roof repair can prevent mold and water damage from growing into major problems and can be far less costly than a full roof replacement. Every roof will need to eventually be repaired or replaced, and the benefits of regular maintenance can far exceed any tax break you might miss out on.