Fiscal cliff deal renews roofing tax credits for 2012-2013

Roger Diez | Improvement Center Columnist | February 12, 2013

One of the major expenses you may incur as a homeowner is replacing your home's roof. The bad news is that a roof typically lasts between 10 and 20 years, and replacement can cost anywhere from around $3,000 to over $12,000 for a typical 2,000-square foot, single story home.

The wide variation in cost is primarily dependent on the roofing material used, but the good news is that energy-efficient roofing materials can save you money on heating and air conditioning, partially offsetting the cost. Even better news: they may also qualify for a tax rebate.

Only certain products qualify

Although tax credits for energy efficient roofing expired at the end of 2011, the recent fiscal cliff negotiations in Congress produced a partial reinstatement of those credits, retroactive to January 1, 2012.

There are a number of conditions attached to the reinstated tax credits, which apply to roofing, insulation, windows and doors, furnaces, air conditioning units, and heat pumps. Only Energy Star certified roofing products are eligible for credit. Fortunately, Energy Star products are readily available through home improvement stores and contractors.

Some additional conditions

Besides the Energy Star requirements, the following conditions also apply:

  1. Only material costs qualify. Labor costs are excluded.
  2. Maximum credit is 10 percent of the cost of the materials, up to $500.
  3. The maximum of $500 applies to all credits claimed since 2006.

This means that in order to receive the maximum credit of $500, your roofing material cost must be $5,000 or more. Also, you must deduct any credits already claimed for energy upgrades since 2006. For example, if you claimed a $200 credit for windows in 2008, the maximum credit you can claim for your new roof is $300.

Other money-saving benefits of energy-efficient roofing

Nearly half of your home's total energy bill goes to heating and cooling, with an annual cost for the average home around $1,000. Energy-efficient roofing can provide significant savings. By reflecting more of the sun's rays away from the building, certain materials dramatically reduce roof surface temperatures. According to estimates by Energy Star, qualified roofing products can reduce peak heating and cooling demand 10-15 percent.

Additional roofing considerations

In addition to energy efficiency, there are other qualities to look for when selecting materials for a replacement roof:

  • Durability
  • Fire resistance
  • Cost
  • Ease of installation

Materials that provide energy savings are metal with pigmented coating, asphalt with cooling granules, and composite with reflective properties. Asphalt and composite shingles are relatively easy to install, moderate in cost, and have good fire resistance. Coated metal roofs have excellent fire resistance and durability, but drawbacks can include the comparative cost to an asphalt or composite roof, and difficulty of installation.

Estimating the cost and ROI of your new roof

As mentioned roofing costs can vary widely depending on the materials chosen. In addition, the larger the roof, the more material and labor are required. Fortunately, the Oak Ridge National Laboratory and the Lawrence Berkeley National Laboratory have combined to develop a roof savings calculator that can help you determine the cost of your new roof. To estimate your return on investment, you would need to factor in your energy savings, tax credit (if any), and increase in your home's resale value. These figures can help you arrive at a decision on what roofing material best suits your needs and your budget.

If you are eligible for the tax credits and need a new roof soon, remember that the renewal of the credits expires at the end of 2013. It might be time to start shopping for materials and a roofing contractor.