If you’re a homeowner in Detroit wondering how your roofing project can save you money on taxes, you’re in the right place. Whether replacing a roof, making repairs, upgrading siding, installing insulation, or adding gutters, there are several ways to take advantage of tax credits and deductions. Let’s break it down and answer homeowners’ most common questions about home improvement and tax savings.
Is Roof Replacement Tax Deductible?
For most homeowners, a roof replacement is considered a home improvement, and they hope for a roof replacement tax deductible; however, a new roof is not tax-deductible. The bright side is, if your new roof includes energy-efficient upgrades, such as ENERGY STAR – certified shingles or insulation, you may qualify for federal tax credits (more on that below).
Steps to Maximize Your Tax Savings:
- Check if your roofing materials qualify – Ensure your new roof meets ENERGY STAR efficiency standards.
- Save all receipts and manufacturer certifications – The IRS requires documentation to claim credits.
- Fill out IRS Form 5695 – This form is used to claim the Energy Efficient Home Improvement Credit.
- Submit your tax return with Form 5695 – Include the credit calculation when filing.
🔗 Download IRS Form 5695 here.
Example Scenario:
Sarah replaced her old roof with a new, energy-efficient metal roof that reflects heat, reducing her home’s energy bills. Because her roofing materials meet ENERGY STAR standards, she qualifies for a 30% federal tax credit on the cost of the materials, saving her $1,500 on a $5,000 roofing material expense.
Special Considerations for Rental Properties:
If you use part of your home as a rental property, you may be able to deduct a portion of the roof replacement cost as a business expense under depreciation rules. The deduction is spread over 27.5 years.
🔗 Learn more about rental property deductions on IRS.gov.
Exception: If you use part of your home for a rental business, you may be able to deduct a portion of the roof replacement costs as a business expense.
How to Get a New Roof Without Paying a Deductible?
If your roof was damaged by a storm, fire, or another covered peril, homeowners’ insurance may cover the replacement cost – but you’ll usually need to pay a deductible. Some strategies to minimize out-of-pocket expenses include:
- Check for disaster relief programs or FEMA grants if a natural disaster has hit your area.
- Looking into state or local financial assistance programs.
- Ask your roofer about financing options or rebates.
Example: The roof of John’s Grosse Pointe home was severely damaged in a hailstorm. His insurance covers only $2000 of the replacement, but the repair is a loss amount of $8,000, including a $1000 insurance deductible. Nevertheless, John learns that his state has a storm damage relief fund, which helps him cover the difference.
Does a New Roof Qualify for the Energy Tax Credit?
Yes – if you install energy-efficient roofing materials! Under the Energy Efficient Home Improvement Credit, you can claim 30% of the cost of qualified improvements (up to $1,200 annually). This includes Energy-efficient shingles that meet ENERGY STAR standards, cool roofs that reduce heat absorption and improve energy efficiency, and new insulation installed as part of the roofing system.
Steps to Claim the Credit:
- Confirm eligibility – Ensure that your roofing materials qualify under ENERGY STAR guidelines.
- Save documentation – Keep all invoices, receipts, and manufacturer certification statements.
- Complete IRS Form 5695 – This helps you calculate and claim your credit.
- File your tax return – Include Form 5695 when submitting your federal taxes.
🔗 Claim this credit using IRS Form 5695.
Example: For Lisa’s Detroit roof replacement project, she chose an ENERGY STAR-certified cool roof for her roof replacement. She spends $5,000 on materials. By filing Form 5695, she claims 30% of the cost-$1,500-as a tax credit, reducing her tax liability.
How to Claim the Solar Tax Credit?
If you install solar panels, you may qualify for the Residential Clean Energy Credit. This credit offers 30% back on the total cost of installation with no lifetime cap. It applies to Solar panel systems, solar batteries, and Geothermal heat pumps.
Steps to Claim the Credit:
- Confirm eligibility – Ensure your solar panels are new and installed on a primary or secondary residence.
- Save your receipts – Keep invoices and proof of payment for all solar-related expenses.
- Complete IRS Form 5695 – This form calculates your credit amount.
- File with your tax return – Include the completed form when filing your annual taxes.
Example: Mike, in Chesterfield, Michigan, installs a solar panel system for $20,000. He qualifies for a $6,000 tax credit that reduces his federal tax bill. When filing his taxes, he includes IRS Form 5695 and enters the total system cost, ensuring he gets the credit he’s eligible for.
IRS Roof Replacement Deduction – What You Need to Know
Roof replacement is generally considered a capital improvement, meaning you can’t deduct it from your tax return. However, if your home is a rental property, you can depreciate the cost over 27.5 years as a rental expense.
🔗 Learn more about rental property deductions on IRS.gov.
Example: Alex owns a rental property in Ferndale, Michigan, and replaces the roof for $10,000. Instead of a one-time deduction, he deducts $364 per year as part of property depreciation.
Are Roof Repairs Tax Deductible?
- For Homeowners: Roof repairs (patching leaks, replacing shingles) are not tax-deductible.
- For Rental Properties: Repairs are considered deductible maintenance expenses.
Example: Karen owns a duplex in Troy, Michigan, and spends $2,000 repairing a roof leak. Because it’s a rental property, she deducts the entire $2,000 as a repair expense.
Is New Siding, Insulation, or Gutters Tax Deductible?
In most cases, replacing siding, insulation, or gutters is not tax-deductible as a home improvement. However, certain upgrades that improve energy efficiency may qualify for federal tax credits under the Energy Efficient Home Improvement Credit.
Siding Tax Deductions:
- Standard siding replacements are not deductible.
- Insulated siding that improves your home’s energy efficiency qualifies for a 30% tax credit up to $1,200 annually.
Example: Mark, in Southfield, MI, installs ENERGY STAR-certified insulated vinyl siding, which costs $5,000. He claims $1,500 back as a tax credit.
Gutters Tax Deductions:
Standard gutters do not qualify for tax credits. However, if your gutters are part of a more extensive energy-efficient drainage system, they may be eligible for roofing tax credits.
Example: Tom installs a rainwater collection system with high-efficiency gutters. He checks with a tax professional to see if part of his upgrade qualifies for credits.
How to Claim These Tax Credits:
- Verify eligibility – Check if your improvements meet ENERGY STAR efficiency standards.
- Keep records – Save invoices, manufacturer certificates, and receipts.
- Complete IRS Form 5695 – Report the qualified costs.
- File with your tax return – Attach Form 5695 to claim your credit.
🔗 Download IRS Form 5695 and include it with your return.
Homeowners can lower their tax burden by making smart, energy-efficient upgrades and enjoy long-term energy savings.
Standard replacements are not tax-deductible. However, if you install energy-efficient siding or insulation, you may qualify for energy tax credits.
🔗 Check ENERGY STAR guidelines for eligible products.
Example: Maria spends $3,000 on ENERGY STAR-certified insulation for her attic. She claims a tax credit for 30% of the cost, or $900.
Investing in a new roof, energy-efficient siding, insulation, or solar panels could save thousands through tax credits. Always keep detailed records, receipts, and certification documents, and consult a tax professional to ensure you maximize your savings.
🔗 Important Tax Forms to Download:
Are you looking for help with a tax-friendly home improvement upgrade? Contact us today for a free consultation! 🏠💰