Other Tax Breaks You Might Qualify For
There are a few possible ways you can write off part of your flood insurance or flood damages.
1. Home office deduction: Do you have a home office in your primary residence that you regularly use as your main place of business? If so, you’re allowed to write off certain expenses associated with maintaining your home office, including insurance premiums. To qualify, you first need to figure out how much of your home is used as a home office. Divide the square footage of the part of your home you use for work by the size of your house. For example, if your home office takes up 15 percent of your home, you can deduct 15 percent of the flood insurance premiums you’re paying and count them as a business expense. Note that the home office expenses you claim can’t be more than your business is making in income.
It’s also important to know that home businesses aren’t always covered. If you have a very small home-based business, your homeowners insurance may cover it. But you should always ask the homeowners insurance company ahead of time whether it’s covered or not. Some businesses need a commercial policy. Always let your insurance company know what’s going on.
2. Business property: You can also deduct flood insurance for a regular office, factory, or store as a business expense. You can deduct the cost of business interruption insurance, too.
3. Rental expenses: Do you own a rental property that’s not your primary residence? You can deduct expenses related to renting property from your gross rental income, including the premiums you pay for flood insurance on the rental property. Think of this deduction like the home office deduction; if you rent out part of the property but use the rest for yourself, you can only claim the rental part of your flood insurance premiums on your tax return. You would usually deduct these expenses in the same tax year you pay them.
4. Casualty losses: If you’re a victim of a natural disaster that the president and federal government declare a major disaster, you can claim a casualty loss on your tax return. Not sure how much you can deduct? Calculate the total amount of your loss, then subtract $100. The amount remaining should be more than 10 percent of your adjusted gross income. You also have to deduct any amounts that your homeowners and flood insurance policies paid toward the damages.