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

What IRS Private Delivery Service Should I Use to File or Pay Taxes on Time?

Review this list of IRS-approved private delivery services to get your tax return and payment mailed on time from H&R Block.

Mortgage Interest Credit – Form 8396

Learn more about IRS Form 8396 and claiming the mortgage interest credit from the tax experts at H&R Block.

Tax Deductions For Home Purchase

Get more from your tax return and learn what tax deductions are available for home purchases with help from the tax experts at H&R Block.

Deducting Mileage For Medical Care

Learn whether you can deduct mileage for medical care from your taxes with advice from the tax experts at H&R Block.