Can You Write Off Your Homeowners Insurance Deductible on a Claim?

by Alan Sembera
Storm damage repairs and associated costs may be tax deductible.

Getting hit by a storm, fire or other calamity can cause major financial stress for homeowners, even if they are covered by insurance. If you're part of this unlucky group, you may be able to claim a little tax relief by deducting part of your losses at tax time. You can't write off amounts covered by insurance, but any losses that must be covered out of your own pocket qualify for the deduction.


You can claim a casualty or theft deduction for any event that is "sudden, unexpected or unusual," according to the Internal Revenue Service. This can include practically anything: floods, fires, storms, thefts, vandalism, car accidents and even volcanic eruptions. Damage that results from normal use or deterioration doesn't count. For example, if your water pipes rust through, you can't claim a tax deduction for the cost of replacing the pipes. But if the pipes burst because of a hard freeze, the event counts as sudden, unusual and unexpected, and you qualify for the deduction.


Losses covered by insurance cannot be used for the deduction, even if you don't file a claim. But if the insurance doesn't cover the entire amount of your loss, or you have to pay a deductible, you still may be able to claim a loss. For example, burglars make off with jewelry worth $5,000, but you decide against filing an insurance claim because you are worried about rising premiums. Your homeowners insurance normally covers $4,000 in burglary losses, so you can only deduct $1,000, even though you never filed a claim. If your insurance policy also has a $500 deductible, you can claim this amount as well, bringing your allowable tax write off to $1,500.

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Calculating Damage

When calculating the loss from an unexpected event, you normally use the decrease in the market value of the property. For example, if your home was flooded, subtract the current value of your home from its value before the flood. This amount, minus any insurance coverage, is your total loss. If the decrease in fair market value is greater than your adjusted basis in the property, you can only use your adjusted basis to figure your loss. The term adjusted basis generally refers to the original cost of a property, plus the costs of any improvements, minus any depreciation you have claimed on the property.

Claiming Deduction

To claim the casualty and theft deduction you must file Form 4684 with your tax return. If the damage was to your personal property, you will claim the loss as an itemized deduction on Schedule A. But you must first subtract $100 from your losses for each separate event. Then you can only deduct the amount of losses that exceed 10 percent of your AGI. If the damage was to business property, you do not have to subtract the $100, and you can deduct the entire amount against your income for that business activity.

About the Author

Alan Sembera began writing for local newspapers in Texas and Louisiana. His professional career includes stints as a computer tech, information editor and income tax preparer. Sembera now writes full time about business and technology. He holds a Bachelor of Arts in journalism from Texas A&M University.

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