Income tax deductions and other savings for tax season
If you re-roofed or retrofitted your home, including to the FORTIFIED Home™ standard, or saved money for your homeowners insurance, you may be able to write it off.
Homeowners could save money if they retrofitted or re-roofed their homes to better protect them from high winds, severe storm or floods. You can also deduct the money you save for your insurance deductible or to repair your home after a disaster. Find out what tax incentives your state offers.
Remember, if you were affected by a federally declared disaster, you might qualify for tax relief by the IRS. Learn more here.
Also, qualifying FEMA disaster relief payments can be excluded from your taxable income. Read the FEMA frequently asked questions and contact you tax advisor to navigate these waters.
ALABAMA
FORTIFIED Home Retrofit Tax Deduction | If you re-roofed or retrofitted your home to the FORTIFIED Home™ standard in the state of Alabama, you could deduct up to $3,000 on your State taxes. Here’s some basic guidance, but please contact your tax professional for more information.
Under Part Two (II), Page Two (2), Line 10 of your Alabama Form 40, enter 50% of the cost of the work OR $3,000, whichever is less. Here is the actual language from the 2016 Alabama Form 40 Booklet (Page 16).
Make sure you have a copy of your FORTIFIED Home designation certificate in case the taxman comes calling. Now save some money and don’t forget to shop your insurance. You could save even more!
Catastrophe Savings Accounts Deductions | What is a Catastrophe Savings accounts you ask? In the simplest terms, it's a regular, brand-new savings or money market account you open, label it "Catastrophe Savings Account" and deposit money in it to cover your homeowners, wind and/or flood insurance deductible(s). Or if you self-insure, use that cash to cover the costs to rebuild your primary residence up to $250,000 or its market value.
You can deduct the deposits you make in any given year into a Catastrophe Savings Account from your taxes.
That's Part Two (II), Page Two (2), Line 11 on Alabama Form 40 (Page 16 of the 2016 Alabama Form 40 Booklet). It gets somewhat complicated but can be worth it - up to $2,000 if your homeowners deductible is $1,000 or less, up to $15,000 if your homeowners deductible is more than $1,000 or up to the lesser amount of $250,000 or the value of your home if you self-insure!
LOUISIANA
Here you have several opportunities to save as well.
Tax credits | Save up to $5,000 or half the costs of the retrofits, whichever is less. This includes FORTIFIED and other construction retrofits the state of Louisiana recognizes. (Page 7).
The Louisiana Citizens assessment | This is not a tax credit, it's a refund on your property insurance. The Louisiana Citizens Property Insurance Corporation assessment is paid as part of the property insurance bill each year by property owners to cover the costs of damages from hurricanes Katrina. If you paid this with your premium, the amount is listed on your policy's declarations page and is partially refundable once it is paid.
Insurance Discounts | Finally, Louisiana homeowners qualify for insurance discounts for building or retrofitting their home to code, by installing damage mitigation improvements or using construction techniques to reduce the amount of damage and loss from a windstorm or hurricane, like FORTIFIED Home.
South Carolina
Residents of South Carolina, like Alabama, can deduct some of the costs for retrofits to their home and catastrophe savings accounts. Learn more from the South Carolina Department of Insurance.
Again, contact your tax professional and your insurance agent to make sure you're getting the tax deductions, and insurance savings and value you deserve.
