Roofing Tax Credits

• The tax credits for energy efficiency offered by the federal government only apply to certain types of energy efficient home upgrades. Not all ENERGY STAR qualified products qualify, as many upgrades pay for themselves through energy savings in a reasonable period of time. The U.S. Department of Energy says that metal and reflective asphalt shingle roofs are the only types of new roofs that qualify for a tax credit. The tax credit amounts to 10 percent of the cost of the new roof up to a maximum credit of $500.
  
  

Limitations

• Tax credits on energy efficient upgrades are subject to a variety of limitations. ENERGY STAR says that the credit for new roofing only applies to roofs installed in existing principle residences, so roofs installed on second homes, vacation homes and newly constructed homes do not qualify. Roofing must be ENERGY STAR qualified to be eligible for the credit and the credit does not include the cost of installation.
  
  

Effects

• A tax credit has the effect of directly reducing tax liability. For example, if a homeowner installed a new $5,000 roof that met the guidelines for the roofing tax credit, he would be eligible for a $500 tax credit. If he owes $4,500 in income taxes at the end of the year before taking the credit into account, the credit would reduce his income tax liability to $4,000.
  
  

Considerations

• The tax credits available for new roofing and certain other energy efficient upgrades such as new heating, ventilation, air conditioning, windows, doors, insulation and water heaters are only available for a limited time. The Department of Energy says that the credits expire on December 31, 2011. In addition, there is a $500 lifetime limit on the credits, so if a homeowner took $500 worth of credits on other improvements in the past, he would not qualify for a credit on a new roof.