If you installed a new roof in the past two years, you may qualify for a tax credit from the federal government. Learn all about which materials are redeemable, how much the eligibility is worth, and how to file a claim.
Roofs that qualify for residential tax credits
There are two types of new roofs that qualify for tax credits: metal roofing and asphalt shingles with cooling granules. However, roofs with solar panels and solar shingles may qualify in the near future as they become more affordable and available.
The tax credit is redeemable by homeowners who have installed “cool roofing” materials. Cool roofing reflects the sun’s heat away from the roof rather than absorbing it. This allows the roof to stay cooler and reduces the demand and consumption of electricity.
Metal roofs coated with a certified paint or pigment specifically designed to reduce heat absorption qualify for an energy tax credit.
White is the most effective color coating, but it’s usually not the first choice for homeowners. Thankfully, there are a number of color options to choose from that still qualify for an energy tax credit.
Asphalt shingles with cooling granules
The granules are treated with a special coating designed to reflect the sun’s rays away from your home and are eligible for a tax credit.
An added benefit of an asphalt roof with cooling granules is that it looks just like a regular shingled roof.
- Get to Know Standing Seam Metal Roofs
- Repainting a Metal Roof: Steps, Tools, and Tips for the Job
- Solar Shingles FAQ: Costs, Composition, and More
Stipulations for tax eligibility
There are a few considerations homeowners must meet to become eligible for a tax deduction on their roof.
- It must be for your primary residence.
- It can’t be for a new home or a rental property.
- Reflective roofs are likely to qualify.
- Roof coatings are not eligible.
If your roof is eligible for a tax return, you can deduct up to 10% of the cost, up to $500.
When you apply for a roof tax credit, make sure you have the copy of the roof manufacturer’s certification in your possession. You don’t need to file it, but it’s a helpful document to consult.
When you submit your tax return, file the Residential Energy Credit Form 5695. It can be found here.
Home sale exemptions
When you sell your home, you typically have to pay capital gains if you make a profit of more than $250,000. Because roof improvements and replacements increase your basis—or the total amount you’ve invested—in your home, they can help keep you under the home sale exemption ($250,00 or less). In this case, you might be able to avoid paying capital gains entirely.
Even if you still have to pay capital gains, your increased basis from replacing your roof with metal or asphalt cooling granule materials will reduce the portion of the sale price that’s considered taxable.
Roofing projects may be covered by your mortgage
Asphalt shingles with cooling granules and metal roofs are not cheap improvement projects. However, one of the easiest ways to reduce the cost of replacing your roof is by making the improvement right after purchasing the home.
If your mortgage payment includes additional money to account for improvements, your “acquisition cost” for the home will include this amount.
Common questions about roof tax credits
Is a new roof tax deductible?
A new roof installed on a brand new home does not qualify for a tax deduction.
I made a repair on my roof. Can I deduct it?
Most likely not. The federal government usually qualifies repairs as current expenses necessary to maintain the property.
Are roof coatings tax deductible?
Are new roof shingles tax deductible?
Learn all about roof pitches, flashing, and installing a new roof:
- An Introduction to Roof Pitches
- Roof Flashing Basics
- A New Roof Could Cost You Nearly Nothing Over Time
Hire a roofing contractor with experience
If you are considering replacing your roof with metal or asphalt shingles with cooling granules, it's important to hire a contractor familiar with these materials. While it's great to replace your roof with an energy-efficient system, it'll only function properly if it is installed correctly.