Is A Roof Replacement A Repair Or Improvement For Tax Purposes?

Finding out you need a whole new roof rather than just a simple patching job is stressful, but learning that you can deduct the costs in some way from your taxes can reduce the sting. There are two main types of home improvements that are used in tax calculations, and determining which category a roof replacement falls into also determines whether you can deduct the entire amount at once or have to spread out the cost over the lifespan of the home. Find out if a roof replacement is considered a repair or an improvement so you file the right paperwork for the maximum tax benefit.

Scale of Work

The main consideration used to determine which category any home work falls into relies on the total scale and impact of the work. A limited amount of work designed to keep the home functioning as it usually does is considered a repair, while a major change that improves or changes its function falls under the category of improvement. Additions of new rooms, conversions of attics into living spaces, and restoration of an essential part of the structure are all considered improvements rather than repairs. The IRS specifically states that replacing a large portion or essential structural component of the house is considered an improvement, so this rule definitely covers a roof replacement since it's such an extensive form of repair.

Structural Importance

You may not think of a roof as having structural importance, but it absolutely does. Aside from being one of the largest single components of a house, damage to a roof has a cascading effect that damages the rest of the structure. This is another consideration that qualifies a roof replacement as an improvement rather than just a repair. A small leak that qualifies as being repaired can also damage the structure. But the damage will be much more limited than what is caused by a roof in such a poor condition that it requires complete replacement.

Restoration of Condition

Finally, the IRS considers any work that restores a home to better condition than it was previously in to be an improvement rather than a repair. If you've bought an older home and it is in poor condition due to a ruined roof, replacing the roof definitely counts as an improvement. Even a home that isn't damaged yet may fall into this category since failing to replace the roof in a timely manner will definitely deteriorate the condition of the home.

To get an idea of what your roof replacement will entail, contact companies like Maynor Roofing & Siding Co. Then you can decide whether it will be a repair or improvement.