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Can I claim flood insurance on my income taxes?

No, but there are other ways floods can lead to tax breaks.

Flood insurance can be expensive, and many policyholders are looking for ways to defray the cost of flood insurance. It can be hard to find lower premiums from an insurance agent, especially if you live in an area that the Federal Emergency Management Agency ( FEMA ) has determined to be at high risk for flood damage.

Rather than looking for a cheaper place to purchase flood insurance, you might be asking: Are my flood insurance premiums tax-deductible?

Can I Claim Flood Insurance Premiums on My Income Taxes?

The short answer is that your flood insurance premiums are not a deductible expense on your individual federal income tax return. Even if mortgage lenders require you to buy flood insurance and you have an escrow account that pays your flood insurance premiums for you, the payments for insurance coverage are not deductible, according to guidelines set by the Internal Revenue Service ( IRS ).

The same applies to regular homeowners insurance, which is also not tax-deductible because the IRS considers it a personal expense. Most costs related to home insurance, like property losses, are also not deductible regardless of whether your homeowners insurance covers the cost of the losses.

However, you may qualify for tax advantages in other ways. Here are a few ways you may be able to slightly lower the cost of insuring your home, even in high-risk areas or flood zones.

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.

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Which Forms to Use

If you have a home-based business and want to write off part of your flood insurance premiums as a business expense on your federal taxes, you would calculate the deduction on Form 8829—Expenses for Business Use of Your Home.

Your home office deduction is reported on Form 1040, Schedule C—Profit or Loss from Business.

Claiming flood insurance premiums for a rental property? Enter them on Schedule E—Supplemental Income and Loss. Then, after you calculate your total real estate income or loss, enter that amount on Form 1040.

If you have suffered casualty losses and need to claim that amount, you would report your loss on Form 4685 and on Schedule A of Form 1040. The deduction will reduce your taxable income, just like any other itemized deductions you might have.

Frequently Asked Questions

  • Why are businesses allowed to write off flood insurance, but not homeowners?

    For homeowners, flood insurance is considered a personal expense. Businesses can deduct the premiums for not only flood insurance but also fire and theft insurance. Landlords can deduct flood insurance for residential rental properties because they’re considered business owners.

  • When can I write off flood-related losses?

    You can only write off flood losses if the loss occurred in a federally declared disaster area and was caused by the disaster. This is true regardless of whether the loss is covered by insurance. If you receive a payout from an insurance claim related to a federally declared disaster, you can only deduct the value that your insurer didn’t reimburse you for. This could include your insurance deductible or the amount of depreciation if you have actual cash value coverage.

  • What is a tax deduction?

    Tax deductions simply lower the amount of your income you pay taxes on. You’re not subtracting the deducted amount from your taxes; you’re just reporting less income than you earned.

Understand How Floods Impact Your Taxes

Taxes can be a confusing subject for taxpayers, but when it comes to claiming flood insurance, the law is clear—you can’t claim it unless your home is part of your business. Confused? Consult an accountant who can determine what you can and can’t deduct and make sure your taxes are correct.

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Tanveen Vohra
Tanveen VohraEditorial Manager

Tanveen Vohra is an editorial manager at Insurify specializing in writing about property and casualty insurance. Through her work, she helps consumers better understand the components of their insurance policies so they can make smarter purchase decisions. She received a bachelor's degree from SUNY Buffalo. You can connect with her on LinkedIn.