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Anonymous
Not applicable

Are insurance payments received for roof damage caused by wind and falling tree branches considered income?

 
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pk
Level 13
Level 13

Are insurance payments received for roof damage caused by wind and falling tree branches considered income?

Assuming that the insurance paid for repair of the damage -- then no it is not an income. Your out-of-pocket portion of the repair can be claimed as  damages ( but often is not worth it  unless large amounts are involved).  Also note that there may be a basis change to the property --- say your property FMV just prior to the storm was $100,000, after the  repair the FMV was $120,000 because of new 30 year roof -- then your basis in the property needs to be adjusted  for the $20,000 (LESS any monies you put into it ) increase in value.   Ditto for rental properties

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2 Replies
pk
Level 13
Level 13

Are insurance payments received for roof damage caused by wind and falling tree branches considered income?

Assuming that the insurance paid for repair of the damage -- then no it is not an income. Your out-of-pocket portion of the repair can be claimed as  damages ( but often is not worth it  unless large amounts are involved).  Also note that there may be a basis change to the property --- say your property FMV just prior to the storm was $100,000, after the  repair the FMV was $120,000 because of new 30 year roof -- then your basis in the property needs to be adjusted  for the $20,000 (LESS any monies you put into it ) increase in value.   Ditto for rental properties

Anonymous
Not applicable

Are insurance payments received for roof damage caused by wind and falling tree branches considered income?




Thanks for your answer pk. Very helpful.
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