How the IRS Metal Roof Tax Credit Works

Homeowners looking to make energy-efficient upgrades may be eligible for federal tax credits, which can lower their income tax liability. While traditional metal and asphalt roofs were once eligible for a credit, the rules have changed. Under the current law, only roofing materials that generate solar energy may qualify for a tax credit. This financial incentive is part of the Residential Clean Energy Credit, designed to encourage taxpayers to invest in clean energy for their homes.

Eligibility Requirements for the Credit

To qualify for a tax credit, the solar roofing must be installed on your principal residence. The IRS defines a principal residence as the home you live in for most of the year, which can include a house, mobile home, or condominium. This credit is intended for improvements to existing homes or for newly constructed properties. The credit does not apply to rental properties.

The roofing materials must generate electricity. Standard energy-efficient metal and asphalt roofing, sometimes called “cool roofs,” are no longer eligible for a tax credit. Only solar roofing tiles and shingles that serve as a source of power for the home qualify.

The timing of the installation is important. The roof must be “placed in service,” meaning the installation is complete, during the tax year for which the credit is being claimed. For example, if the materials are purchased in December of one year but the installation is not finished until January of the next, the credit would be claimed on the tax return for the later year.

Calculating the Solar Roof Tax Credit

The value of the tax credit is 30% of the total cost of the new solar roofing system. This calculation includes the cost of the solar shingles or tiles as well as the labor costs for onsite preparation and installation. For instance, if a homeowner spends $30,000 on a new solar roof, the credit is calculated on the total $30,000 cost. In this scenario, the credit would be 30% of $30,000, which equals $9,000.

Unlike some other home improvement credits, the Residential Clean Energy Credit has no annual cap or lifetime limit. It is important not to confuse this with the Energy Efficient Home Improvement Credit, which provides a credit for other items like energy-efficient windows, doors, and insulation. That credit has a separate annual limit of $1,200 for such “building envelope components” and does not cover labor costs.

Documentation and Claiming the Credit

A Manufacturer’s Certification Statement is a signed document from the product manufacturer attesting that the specific roofing material is eligible for the tax credit. A taxpayer should not assume a roof qualifies without this proof; they must obtain a copy from their contractor or directly from the manufacturer and keep it with their tax records. In addition to the certification, the taxpayer must retain detailed receipts or invoices that document the total cost of the project, including materials and labor.

The credit is claimed by filing IRS Form 5695, Residential Energy Credits, with your annual tax return. The cost of the qualifying solar roofing is entered in Part I of the form. Once the total credit amount is calculated on Form 5695, it is then transferred to the appropriate line on your main tax form, such as Form 1040. Because this is a non-refundable credit, it can lower your tax bill to zero, but you will not get any of it back as a refund if the credit amount is more than what you owe.