Doing My Roof, Need Advice On Tax Writeoffs
I have a duplex that I live in and it needs a roof which I plan on doing in the spring. My question is in reguards the ability to write off half the cost of the roof.
I'm wondering which route would save me more $$$$ since I'm pretty handy and have some good friends that used to roof that are willing to help. It would only take about a day to a day in a half, and I have most of the tools.
1) Do the roof myself with friends help estimated cost $1200-$1500, I can still writeoff the cost of materials, but not labor right?
2) hire a roofing company estimated cost probably $2500+ but I would be able to write off half the cost including labor
thanks
I am assuming that you own both halves of the duplex, living in one unit as your primary residence while using the other as an investment rental. The following response is predicated upon this assumption.
A roof replacement is a capital expense not a deduction. Whether you do the roof work yourself and just have a materials cost or contract out the entire job and pay for labor and materials, you allocate half of your actual cost to your rental unit and allocate half of the cost to your primary residence unit. You did a similar exercise once before when you calculated your depreciation cost basis for the rental unit.
Now, take the rental unit portion of your actual cost and include it on your next Schedule E as a depreciable improvement. You recover your roof replacement cost over a 27.5 year recovery period by taking a depreciation expense deduction on your Schedule E. For each depreciable improvement, you maintain a separate depreciation schedule.
The primary residence half of your actual out-of-pocket cost is added to the cost basis allocated to your primary residence unit. You recover your cost for this half of the improvement when you sell the property at a profit.