If you’re a Florida homeowner, either a hurricane will get your roof or the insurance company will. Is a new roof tax-deductible? Let’s look at routine replacements and damaged roofs.
My roof is old. / The insurance company is making me replace my roof.
All roofs need to be replaced eventually. Exactly how long that is depends on your roof and how ridiculous your insurance company is being.
If you’re replacing your roof due to age, what you definitely can’t do is write off the entire cost in the year you replaced your roof.
In some cases, a roof replacement could be considered a capital improvement. A capital improvement doesn’t lower your taxes this year, but it can lower potential capital gains taxes when you sell your home.
So when is a roof replacement a capital improvement? Roofing companies will tell you that any roof replacement is a capital improvement. Of course, they will. They want to sell you a new roof.
Tax pros will usually tell you it depends and then debate about the actual answer. The thing with capital improvements is that it’s supposed to be something that makes your home better. It’s not something that restores your home to its previous condition.
If you replace your roof with exactly the same type of roofing material, treating your roof as a capital improvement can be questionable. If you upgrade, such as to more energy-efficient shingles or to a metal roof, it’s more likely that your roof will count as a capital improvement.
My roof was damaged by a hurricane.
If you have to repair or replace your roof due to a hurricane or tropical storm, that cost may be deductible as a casualty loss.
For personal residences (not business properties), you can only claim a casualty loss in tax years 2018 through 2025 if the loss occurred in a federally declared disaster area.
Most of the big hurricanes are federally declared disaster areas. Some of the smaller storms don’t get declared.
And if you’re on the edge of the storm, sometimes you get left out of the declared disaster area. Sometimes it’s for all of Florida, but sometimes it’s only for the hardest-hit counties.
To claim the deduction, you’ll need to have proof of:
- Your roof being damaged in the storm (such as photos, estimates from a roofing company after the storm, insurance claims, etc.)
- The cost of the replacement or repairs (such as invoices and receipts)
There’s also no double-dipping. You can’t deduct the portion of costs paid by insurance since insurance money generally isn’t taxable. If you claim a casualty loss deduction, you also can’t treat the same expense as a capital improvement.
My roof was damaged by a thunderstorm, tornado, fire, etc.
Before the new tax law in 2018, other disasters were generally deductible the same as federally-declared disaster areas. In the tax law that runs from 2018 to 2025, homeowners can’t deduct losses from non-declared disasters, but businesses generally can.
Since your exact circumstances can vary, ask your tax advisor how the rules apply to your specific situation.
