Tax Credits for Replacing Your Roof

If you added a heat-efficient metal or asphalt roof to your house last year, you may be able to claim a $500 energy tax credit by filing IRS Form 5695 with your return.

Tax credit limits and deadlines:

  • 10% of expenditures, up to a lifetime $500, for all energy improvements combined.
  • A relevant roof must have been installed by Dec. 31, 2014.
  • Save receipts and labels.
  • For roofs, installation isn’t covered.

See Energy Star for guidelines on what exactly is covered. It’s your safest bet for information on how to get the credit.

Be warned that not all roofs, not even all roofs with the Energy Star seal, will qualify. Only specially manufactured roofs, as listed on the Energy Star site, are eligible.

Don’t rely solely on contractors who may not know the details or who promise their products will get the credit in order to make a sale.

Roof costs and savings

The average cost of an asphalt roof, which should last 20 years, is about $19,528, according to the most recent “Cost vs. Value Reportfrom “Remodeling” magazine. Metal roofs are more expensive, but will last for 50 years.

If you hire a contractor, get an itemized bill that breaks out the cost of materials since labor doesn’t count toward the tax credit. Materials should account for about half the bill on standard roofing jobs.

What can you save on your energy bills?

If you live in the hot South or Southwest, expect to save between 7% and 15% on your cooling costs with energy-efficient roofing materials, says Michelle Van Tijen of the Cool Roofs Rating Council.

If you pay $300 a month to cool your home, figure you’ll cut your monthly bill by as much as $45.

Ironically, with roofs there is such a thing as being too energy efficient. In winter months, roofing materials with very high heat-deflecting qualities can increase heating bills. However, you’re more than likely to make up the difference on your air-conditioning costs. That’s especially true if you live in an area where you run your air conditioner much of the year.

Choosing the right roof

Before calling the roofers, know the details of the energy tax credit requirements:

  • You must use either metal or asphalt roofing materials that are designed to reduce heat gain — the amount of heat transferred into a home.
  • Metal roofs must have appropriate pigmented coatings.
  • Asphalt roofs must have appropriate cooling granules.
  • Asphalt materials can be either traditional shingles or modified bitumen (rolled asphalt sheets).

How much roof do you need?

Get an estimate by figuring the square footage of the footprint of your home and adding about one-third more to account for roof pitch, overhangs, dormers, gables, and so on.

Roofing contractors often quote in terms of “squares.” One square equals 100 square feet. So if a roofer says your house is 20 squares, it means it’s roughly 2,000 square feet — 20 times 100.

Finding the right roof vendor

Once you’re ready to pick a roof type, talk to an area building wholesaler or a company that specializes in roofing materials. Consult with someone who knows what types of materials are appropriate for a given region’s climate. Big-box retailers may not have as wide a selection or knowledgeable staff.

Finding a good roofer entails the same steps as finding any qualified contractor:

  • Ask neighbors for recommendations.
  • Collect at least three bids.
  • Check references.
  • Get everything in writing.

Craig Silvertooth, executive director of the Center for Environmental Innovation in Roofing, recommends finding a contractor through the National Roofing Contractors Association, which has about 4,000 members.

Sometimes, replacing a roof isn’t worth it

If your roof is in perfectly good shape, even the savings and tax break may not be good enough reasons to get a new one. Consider other options:

  • A roof coating—a material painted over your existing roof that offers insulation and sun reflection, says Silvertooth. Roof coating costs about 75% less than replacing a roof, though it doesn’t qualify for the tax credit.
  • Add more insulation to your attic. This home-improvement project can even be tackled by weekend warriors, and it qualifies for a federal tax credit.
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

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These articles are not intended to give legal or tax advice, and you should consult your attorney or financial advisor for additional information.

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