Responsible residential homeowners understand the critical importance of managing their personal finances thoroughly. Home repairs, renovations, and improvements can cost a small, or even large, fortune. These expenses are often unavoidable, especially concerning essential home components like a roof. A failing roof cannot be overlooked. When a roof requires replacement, conscientious homeowners research roofing companies to find the right fit. They also budget for this undertaking. Astute homeowners ask, “is roof replacement tax deductible?” They also explore potential tax benefits, credits, exemptions, rebates, and other incentives.
As A Home Improvement, Is A Roof Replacement Tax Deductible?
For the average homeowner, a commonly held belief is that home improvements, including roof replacements, are tax deductible. Unfortunately, most home improvements do not offer a federal, state, or local tax deduction, or any other tax incentive, for that matter. A roof replacement has no tax advantage for the typical homeowner.
However, all is not lost. Federal tax credits exist under the Inflation Reduction Act, which was signed into law in 2022. These credits incentivize homeowners to make specific energy-efficient home improvements to help them “go green,” reduce their reliance on fossil fuels to maintain their homes, and meet their energy needs.
Accessing Energy Efficient Home Improvement Federal Tax Credits
Homeowners who wish to pursue energy-efficient home improvement projects to upgrade their roofing system have two options if they want to receive federal tax credits. Each option must meet exacting standards to qualify for the available tax incentives. Homeowners should consult with their tax advisor to learn more about these benefits.
Insulation Tax Credit
For insulation products bought and installed between January 1, 2023, and December 31, 2032, a homeowner can claim 30% of the product cost up to a maximum of $1,200, annually. Those items include air sealants, such as caulk, house wrap, spray foam, and weather stripping, which reduce air leaks. They also include products such as insulation rolls and blow-in fibers. Bulk insulation materials may qualify under this provision. Many companies that specialize in roofing offer these services, which are typically included in their overall range of options.
Windows And Skylights Tax Credit
Regarding skylights purchased and installed on a roof between January 1, 2023, and December 31, 2032, a homeowner may claim 30% of the product cost up to a maximum amount of $600, annually. Within this provision, any installed skylight must meet the Energy Star Most Efficient criteria, recognizing the most efficient products among the ones that otherwise qualify for the Energy Star program. Homeowners should work with a knowledgeable roofing professional to ensure that they acquire a compliant skylight.
Energy Efficient Home Improvement Maximum Annual Limits
Under the Inflation Reduction Act, insulation and skylights are both classified as home envelope improvements. The annual limit for home envelope improvements is $1,200 (Note: The yearly limit of $600 continues to apply to skylights). Home envelope improvements also encompass windows, doors, electrical, furnaces, boilers, and central air conditioners. These federal tax credits allow homeowners to claim the product cost only, not the labor associated with installing the product, which has no tax incentive.
For example, if in 2024, a homeowner purchases and installs $2,500 worth of insulation and a $2,000 skylight, they can claim a total of $1,200. In this case, the homeowner can claim up to 30% of $2,500, which would be $750. They also can claim up to 30% of $2,000, which would be $600. Adding $750 to $600 equals $1,350, which exceeds the annual aggregate limit of $1,200 by $150. The homeowner would claim a federal tax credit of $1,200 for the given tax year, 2024.
If, in 2025, the homeowner purchases and installs an additional $4,000 worth of insulation and a separate $1,000 skylight, they can claim a total of $1,200. In this event, the homeowner can claim up to 30% of $4,000, which would be $1,200. They also can claim up to 30% of $1,000, which would be $300. Combining $1,200 to $300 totals $1,500, which exceeds the annual aggregate limit of $1,200 by $300. The homeowner would only claim $1,200 as a federal tax credit for 2025.
The Advantages Of Hiring A Local Roofing Contractor For A Roof Replacement
For homeowners in Grand Rapids, MI, and surrounding Western Michigan communities, Moore & Sons Roofing sets the industry standard for quality customer service, exceptional craftsmanship, and unmatched roofing products. As a local, family-owned roofing contractor in Western Michigan, our commitment to homeowners separates us from the competition.
Because we are an Owens Corning Platinum Preferred Contractor, we stand apart as one of the most reputable roofing contractors nationwide. This distinction ensures that your roofing experience meets or exceeds your expectations. Contact Moore & Sons Roofing today to learn about our superior roofing services. Schedule a free consultation.
