Tax season is here, and many taxpayers are looking for deductibles. Homeowners may be able to take advantage of a few deductibles and get a tax break on some of their home insurance premium payments. Always consult your tax advisor on how the tax laws affect your specific circumstances, however, here are a few tips on how you can take advantage of tax deductibles this year.
Claims Proceeds
If you experienced a loss and submitted a claim for theft, damage, or any other type of loss, you may be able to deduct the difference between your insurance settlement and the cost of a loss. For example: if your roof replacement cost was $30K and you received $25K as a loss settlement, the $5K out-of-pocket difference, if not part of your deductible, may be able to be deducted from your annual taxes. Conversely, if you receive $30K for your roof, and you get a discounted price of $25K from the contractor, you may have to pay for the additional gain of $5k. Therefore, it's important to keep track of all associated costs related to a loss to your insured home Speak to your accountant to ensure you are reporting all gains and losses properly.
Renting Out Property
Renting out a secondary condo on a seasonal basis may allow you to deduct property insurance for this property as a business expense. For example, if you are renting out your Florida condo for a portion of the year, you may be able to deduct the prorated insurance premium from your taxes for the months the property is rented.
Flood Casualty Losses
While you can't itemize the flood insurance premiums you pay, there is a claim you can make on your federal tax return that can benefit you. Victims of a flood which is declared as a major disaster by the president can file a casualty loss claim. In order to figure out the deduction amount, you must subtract $100 from the total loss cost, and any costs the homeowner and flood insurance covered for damages. The remaining amount must then exceed 10% of your adjusted gross income in order to file for a deduction.
Check with your Advisors
It's always best to check with your agent or tax advisor before filing your taxes. For continued support and any questions Edison Insurance Company is here for you. Ask your agent how they can help make sure you have the proper coverage or call us at 866-568-8922.
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