I am in the process of upgrading my home with home improvement projects. Can I deduct the cost of a new roof?
Unfortunately you cannot deduct the cost of a new roof. Installing a new roof is considered a home improve and home improvement costs are not deductible.
However, home improvement costs can increase the basis of your property. For most homeowners the basis for your home is the price you paid for the home for or the cost to build your home.
Home improvements increase the basis of the property. This is called the adjusted basis. Some examples of improvements that may increase your basis include:
Replacing the entire roof
Rewiring the home
Putting an addition on the home
Installing central air conditioning
Paving the driveway
You will need to keep records of all home improvements made to increase the basis or determine the adjusted basis of your property. As you improve your home and increase the basis, the gain on your property will decrease when you sell it.
A property gain in the increase in the value of the property. The higher the gain, the more tax you will pay when you sell the property. The adjusted basis helps to offset the gain by increasing the base value of the home.
For more information about adjusted basis, please visit: https://www.irs.gov/publications/p530/ar02.html
Need to know how to calculate estimated taxes? We're here to help. Get tax answers from H&R Block today.
Learn about your w-4 and the tax withholding allowances with our articles from the tax experts at H&R Block.
Will being a first-time homeowner affect your tax return? What deductions can you claim? Learn more from the tax experts from H&R Block.
Learn whether you can claim education credits and deductions if your child's form 1098-T has his or her SSN on it with advice from the tax experts at