1099-misc Strengthen Your Roof Grant

[mrr6]

I received a 1099-MISC from the NC INSURANCE UNDERWRITING ASSOCIATION for a $6000.00 grant to help pay for a roof upgrade to a "Fortified roof" on my primary residence. It was called the "Strengthen Your Roof Grant".

The FATCA filing requirement box is NOT checked on the 1099. It was reported as other income on line 3.

There was no damage to the roof and no claim filed. This is a grant program that the NC Underwriting Association does for homeowners that live in specific areas prone to hurricanes (Outer banks of NC). It's cheaper for them to put fortified roofs on homes instead of paying for possible damage to the roof and interior damage of a home should it be damaged by a hurricane. Must I claim this as income on my 2020 taxes?

Thank You

[ThomasM125]

Yes, grants such as that are taxable since you received an economic benefit. 

[sjb12]

Hi.   I received money from the same program.   However, this property is a rental and not my primary residence.

The roof had a few more years left on it, but the insurance company suggested i get it done while the program is out there.   I got a 1099.

The money offset a $13,000 roof job.    If i had a "regular roof" put on, it would have cost about 8000.

shouldnt this 6,000 be considered "income" somewhere on Schedule E?   i have no place to put it other than on the "rent line".

thoughts?

[Opus 17]

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@sjb12 wrote:

Hi.   I received money from the same program.   However, this property is a rental and not my primary residence.

The roof had a few more years left on it, but the insurance company suggested i get it done while the program is out there.   I got a 1099.

The money offset a $13,000 roof job.    If i had a "regular roof" put on, it would have cost about 8000.

shouldnt this 6,000 be considered "income" somewhere on Schedule E?   i have no place to put it other than on the "rent line".

thoughts?

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Yes, it's still taxable because it's free money.  If it was an insurance reimbursement for storm damage, it would be reimbursable to the extent that it was more than your storm cost, but that does not seem to be the case.  Then, you will enter the entire $13,000 cost as a depreciable asset.

(If it was not taxable, the cost of the improvement for depreciation would be your net cost.  But I believe it is still taxable.)

[mrr6]

Hi sjb12,

This is my primary residence so I just included the $6000.00 as income. I'm not sure but if you sell your property you might be able to reduce your capital gains tax after depreciation for the cost of the new roof.

Good luck

[Opus 17]

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@mrr6 wrote:

Hi sjb12,

This is my primary residence so I just included the $6000.00 as income. I'm not sure but if you sell your property you might be able to reduce your capital gains tax after depreciation for the cost of the new roof.

Good luck

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Because this taxpayer is a rental, their cost basis is handled differently.  The total work job does increase the value of the property and may reduce capital gains, but is also subject to depreciation as commercial property. 

[sjb12]

Hi all,  this is my first post on Turbo Tax and I appreciate your comments.   I was struggling with where to put it on Schedule E, as Turbo Tax would not allow me to put it as "Other Income" as it was coded on the 1099.    Being a CPA  (semi-retired and not practicing anymore) I was trying to put in on Schedule E as income as it related to the rental and I have a minor annual loss on the property i wanted to offset.

However, I found in the Instructions to Schedule E on page 6, it says to put all "income" on line 3 (rental income) and if necessary attach a statement as to what the income was for.   So my annual loss is used against this income.

I did that, its all documented, so I am good.  I have to manually file given the statement attached but thats ok.

[Opus 17]

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@sjb12 wrote:

Hi all,  this is my first post on Turbo Tax and I appreciate your comments.   I was struggling with where to put it on Schedule E, as Turbo Tax would not allow me to put it as "Other Income" as it was coded on the 1099.    Being a CPA  (semi-retired and not practicing anymore) I was trying to put in on Schedule E as income as it related to the rental and I have a minor annual loss on the property i wanted to offset.

However, I found in the Instructions to Schedule E on page 6, it says to put all "income" on line 3 (rental income) and if necessary attach a statement as to what the income was for.   So my annual loss is used against this income.

I did that, its all documented, so I am good.  I have to manually file given the statement attached but thats ok.

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If you have further questions, post them here.  @Carl is my go-to guru on rentals. 

[jq_magoo]

Thank you very much for your post.  BTW - going to try to attach explanation using efile w/attached pdf.    Using:  https://proconnect.intuit.com/community/electronic-filing/help/how-to-attach-a-pdf-to-form-1040-for-...

[Laura84]

Thank you for this!  I spent an hour on the phone with tech support to see if they could generate an itemized detail of line 3 on schedule E - “rents” to break out my rents and grant income.  To no avail, so I guess I’ll be printing to paper and mailing in.  I’m shocked turbo tax doesn’t have a mechanism to generate the statement or add a statement to the return.