Insurance Information Institute Says Property Damage May be Tax Deductible for 2009
Posted in Home Insurance
March 11th, 2010
A recent report from the Insurance Information Institute (III) explains that taxpayers who suffered a loss of personal property that was not entirely covered by their insurance in 2009 may be eligible for tax deductions. Of course, there are some guidelines to consider before simply claiming a deduction, but according to III, if you suffered a loss, you may very well be able to get a few breaks this tax season.
What May be Eligible for Tax Deductions?
In a press release from III, Jeanne M. Salvatore, senior vice president and consumer spokesperson said, “If your home, car or boat was damaged or destroyed by a windstorm, fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes.”
However, there are tworequirements for claiming any tax deductions:
- The losses must have been substantial.
- You would have had to be either be significantly underinsured or had a large catastrophe deductible with your home insurance policy.
If both are true for you then you may have a sizable unreimbursed casualty loss.
How Does Deducting Loss Work?
According to the press release, you can generally deduct the loss to the extent that it exceeds 10 percent of your adjusted gross income, less $500. However, if the property is used in a trade or business, slightly different rules would apply, requiring that you ask your tax preparer for assistance.
Also, it’s good to keep in mind that if you were the victim of a federally-declared disaster, you may qualify for a broader package of tax benefits under the National Disaster Relief Act of 2008. In this case, the federally-declared disaster must have occurred after Dec. 31, 2007 but before Jan. 1, 2010.
To prove you qualify, you must first substantiate your property loss through receipts, home insurance statements, police reports (if applicable) and any other documentation for your tax preparer too see.
If you think you might qualify for any of the tax deductions, it’s good to first ensure that you’ve followed the right steps when filing an insurance claim. Then check with your tax preparer or visit the IRS website for additional steps to take to make sureyou getproperly reimbursed for the loss you suffered in 2009.