Question

I am in the process of upgrading my home with home improvement projects. Can I deduct the cost of a new roof?

Answer

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

Related Topics

Related Resources

Filing for a Deceased Taxpayer

If you need help handling an estate, we're here to help. Learn how to file taxes for a deceased loved one with H&R Block.

Is Volunteer Work Tax Deductible? | H&R Block

Spending your time volunteering is a great way to give back. Learn more about the tax benefits for volunteer work when filing your taxes at H&R Block.

What’s the Difference? Enrolled Agent vs. CPA

What’s the difference between an enrolled agent (EA) vs. a certified public accountant (CPA)? Explore the roles of EAs and CPAs at H&R Block.

Earned Income Credit

Learn more about earned income credit eligibility and get tax answers at H&R Block.