topic Insurance home replacement question. in Get your taxes done using TurboTax

Insurance home replacement question.

theweav — Thu, 28 Jan 2021 19:04:22 GMT

My home was destroyed by a tornado in 2020 and declared a total loss by my insurance. I had a replacement policy and decided to purchase a house rather than rebuild. I purchased a house in 2020. The settlement included Dwelling, Personal Property, and Living Expenses. Does any of this need to be reported. If so, how? After the dwelling was hauled away, I sold the lot. Where on my Turbo Tax do I report this.

Thanks for any help on this.

Re: Insurance home replacement question.

AmyC — Sat, 30 Jan 2021 03:13:47 GMT

To claim a loss on your return, it has to be more than 10% of your income and in a disaster zone. After insurance, there may not be enough left to make a claim on your taxes. See Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property)*
The insurance received is not taxable.
You sold you main home. If it was your main home that you lived in 2 out of 5 years, you may not need to report the house sale at all. See Topic No. 701 Sale of Your Home.

Chances are you can put a horrible 2020 away with none of this on your return.

* Personal casualty and theft losses of an individual, sustained in a tax year beginning after 2017, are deductible only to the extent they’re attributable to a federally declared disaster. The loss deduction is subject to the $100 limit per casualty and 10% of your adjusted gross income (AGI) limitation.

Re: Insurance home replacement question.

theweav — Sat, 30 Jan 2021 19:06:39 GMT

Thanks very much for your reply Amy. Since the insurance is not taxable, do I need to show the purchase of the replacement house on my tax return? Also, do I need to show the sale of the lot. If so, how. I am using the basic free Turbo Tax return. I have been retired for many years and have had no taxable income to report. I have filed a return every year. We had lived in the home lost to the tornado for 30 years. Thanks again for your help.

Re: Insurance home replacement question.

AmyC — Tue, 02 Feb 2021 02:55:28 GMT

The lot was your main home - when it had a house, so you have nothing to report. The replacement does not need to be reported. The laws have changed much over time. I am sorry for your loss. I hope the new home turns out to be a blessing.

If you have a 1099-S, you might get a letter from the IRS saying you owe taxes. You write back and explain what happened and there will not be a problem. You have nothing to report.

Re: Insurance home replacement question.

theweav — Tue, 02 Feb 2021 18:28:15 GMT

Thanks for your kind words and expert help. I really appreciate it.