Tax Deductions to Help You Save Money - Mitigation and Disaster Recovery
Tax incentives and deductions you may qualify for when renovating your home.
You could save money on taxes this year if you've made updates to your home that strengthen it. Several states provide tax credits or deductions for retrofitting your home to a stronger standard or adding other mitigation measures that better protect it from wind and flood damage. Additionally, there are opportunities to claim disaster-related expenses on your taxes. States with tax credits or deductions include Alabama, Georgia, Louisiana, Mississippi, and South Carolina. But find out if your state offers other types of discounts, such as for wildfire resistant retrofits.
Use the resources we’ve gathered as a guide and consult a tax professional about how these may affect your specific tax situation.
The Retrofit Tax Deduction - Provides residents an opportunity to get a tax break when mitigating their home or business. You can deduct up to $3,000 or 50% of the cost of the work, whichever is less on your State taxes. Under Part Two (II), Page Two (2), Line 10 of your Alabama Form 40, enter 50% of the cost of the work OR $3,000, whichever is less.
Catastrophe Savings Accounts Deductions - A Catastrophe Savings Account is used to pay for insurance deductibles or other costs related to a catastrophe. You can deduct the deposits you make to this savings account from your taxes in any given year into a designated Catastrophe Savings Account. Found in Part Two (II), Page Two (2), Line 11 on Alabama Form 40). It gets somewhat complicated, but can be worth it - up to $2,000 if your homeowners deductible is $1,000 or less, up to $15,000 if your homeowners deductible is more than $1,000 or up to the lesser amount of $250,000 or the value of your home if you self-insure!
Disaster Assistance Credit - A taxpayer who receives disaster assistance during a taxable year from the Georgia Emergency Management and Homeland Security Agency or the Federal Emergency Management Agency shall be allowed a credit against the tax imposed by Code Section 48-7-20 in an amount equal to $500.00 or the actual amount of such disaster assistance, whichever is less. The commissioner may require adequate supporting documentation showing that the taxpayer received such assistance. The total amount for the tax credit cannot exceed the taxpayer's income tax liability. Any unused tax credit shall be allowed the taxpayer against any succeeding years' tax liability. No such credit shall be allowed the taxpayer against any prior years' tax liability
Construction Code Voluntary Retrofitting Deduction - Homeowners can save up to $5,000 or half the costs of home retrofits, whichever is less. This deduction includes FORTIFIED Home™ and other construction retrofits the state of Louisiana recognizes. On the Individual Income Tax form IT-540, go to Schedule E and find the code 16E. Add that code along with the cost of any voluntary retrofits for your residential structure to claim the adjustment to income.
The Louisiana Citizens assessment - This is not a tax credit, it's a refund on your property insurance. The Louisiana Citizens Property Insurance Corporation assessment is paid as part of the property insurance bill each year by property owners to cover the costs of damages from Hurricane Katrina. If you paid this with your premium, the amount is listed on your policy's declarations page and is partially refundable once it is paid. Add the amount you paid to Line 22 of Individual Income Tax form IT-540.
Catastrophe Savings Account Tax Deduction - Enter the amount deposited into a catastrophe savings account plus any accrued interest as defined in the Catastrophe Savings Account Act. Any amounts that are withdrawn other than to pay qualified catastrophe expenses shall be included in gross income. This adjustment is to be deducted from the gross income of a taxpayer and is similar to federal adjustments to gross income. These adjustments should be reported on line 22 of the Individual Income Tax Form. Fill out form 80-360 Mississippi Catastrophe Savings Tax Schedule and attach to Individual Income Tax Form. Read the instructions and limitations on Form 80-360.
Casualty Loss Deduction from Federally Declared Disaster - Casualty and theft losses are only allowable for losses attributable to federally declared disaster areas. A casualty or theft loss is calculated on the same basis and subject to the same limitations as under federal law. If you filed your federal return using the standard deduction and wish to itemize deductions for Mississippi purposes, use a Federal Form 1040 Schedule A as a worksheet and transfer the information from the specific lines indicated to the Form 80-108 Mississippi Itemized Deductions, Schedule A. Federal Form 4684 must be attached.
Tax Credit for Retrofit Project Costs - Allows a tax credit to help offset the costs of mitigation to one’s legal residence. The credit is up to 25% of the total costs incurred or $1,000, whichever is less. Fill out form SC SCH TC 43. Attach to your Individual Income Tax Return.
Tax Credit for Retrofit Supplies - Allows SC taxpayers a credit of up to $1,500 against the state sales or use taxes paid on purchases of tangible personal property used in a qualified fortification project. Eligible fortification projects include roof covering construction, roof attachment, roof-to-wall connections, secondary water resistance, and opening protections. Fill out form SC SCH TC 43. Attach to your Individual Income Tax Return.
Tax Deduction for Casualties, Disasters, and Thefts - A federal Hurricane Tax Deduction is allowed for uncompensated damages from a qualified disaster loss. A qualified disaster loss is an individual’s casualty or theft loss of personal-use property that is attributable to a major disaster declared by the President under section 401 of the Stafford Act in 2016, as well as from Hurricane Harvey, Tropical Storm Harvey, Hurricanes Irma, and Maria, or the California wildfires. If you suffered a qualified disaster loss, you are eligible to claim a casualty loss deduction, to elect to claim the loss in the preceding tax year and to deduct the loss without itemizing other deductions on Schedule A (Form 1040). Fill out Federal form 4684, attach to your Federal Income Tax Return (Form 1040). See the instructions for more guidance and limitations.