Are these payments taxable?

[Carpediem]

We have a beach condo that we rent out via Abnb. The condo was pretty much a complete rebuild after hurricane Sally last year. As a result, our HO6 insurance reimbursed us for loss of rent and also for loss assessment this year.

Since this is the first year for us on ACA, I am obviously watching our income very closely so I'm wondering if the reimbursements for rent loss and for loss assessment are considered taxable income. Thoughts?

I've searched and searched for the answer online but no luck.

Thank you!

 

[njhowie]

See discussion on intuit.com - the consensus is that it is taxable/reportable income, which you will likely receive a 1099-MISC for.

https://ttlc.intuit.com/community/i...ieve-they-are-but-i-cannot-find-the/00/356249

 

[pb4uski]

That was what I was thinking as I read the OP.

 

[Carpediem]

See discussion on intuit.com - the consensus is that it is taxable/reportable income, which you will likely receive a 1099-MISC for.

https://ttlc.intuit.com/community/i...ieve-they-are-but-i-cannot-find-the/00/356249

Thank you for the link. I kinda figured the rent loss payment was taxable. I'm guessing the loss assessment payment is not but not sure. I'm hoping someone can weigh in on that too.

 

[ivinsfan]

What exactly do you mean by loss assessment?

 

[Carpediem]

What exactly do you mean by loss assessment?

"Loss assessment coverage is an optional endorsement that you can add onto your homeowners insurance or condo insurance policy (HO6). It helps protect you if you live in a shared community, like a condo or homeowners association (HOA), where you're responsible for a portion of damage or loss in a common area."

In our case, the Board issued a special loss assessment to help pay the master policy insurance deductible. The amount for us was $2640. I believe the deductible was 3% on the $25MM coverage max. The resort used all of the $25MM.

 

[njhowie]

What exactly do you mean by loss assessment?

In condos/townhomes which have an HOA, if there is a large unexpected expense for which reserves have not been accumulated, then the association levies a special assessment against each homeowner to cover the expenses. With your homeowners insurance you can get a rider which covers special assessments due to a loss as OP has. The amount of the assessment is usually prorated for each homeowner based on the square footage of their unit.

 

[ivinsfan]

"Loss assessment coverage is an optional endorsement that you can add onto your homeowners insurance or condo insurance policy (HO6). It helps protect you if you live in a shared community, like a condo or homeowners association (HOA), where you're responsible for a portion of damage or loss in a common area."

In our case, the Board issued a special loss assessment to help pay the master policy insurance deductible. The amount for us was $2640. I believe the deductible was 3% on the $25MM coverage max. The resort used all of the $25MM.

Did you get the exact 2640, ...in our case when we get reimbursed from insurance for machinery damage or building damage the only taxable part would be left over money after replacing or fixing the item. We have a regular C corp and that's how we report it.

 

[Carpediem]

Did you get the exact 2640, ...in our case when we get reimbursed from insurance for machinery damage or building damage the only taxable part would be left over money after replacing or fixing the item. We have a regular C corp and that's how we report it.

Yes, we received the full $2640. The assessment amount was calculated as:

$25MM * .03 (3% deductible) = $750,000

$750,000 / number of condo units = loss assessment amount for each unit

In reality, the 2br units received a higher loss assessment than the 1br units, which we have.

 

[ivinsfan]

Yes, we received the full $2640. The assessment amount was calculated as:

$25MM * .03 (3% deductible) = $750,000

$750,000 / number of condo units = loss assessment amount for each unit

In reality, the 2br units received a higher loss assessment than the 1br units, which we have.

Did you pay the assessment by check..you had a casualty and were brought back to even ...

 

[Carpediem]

Did you pay the assessment by check..you had a casualty and were brought back to even ...

We paid the assessment via echeck and then filed our claim a month or so later. Yes, brought back to even. So does that mean $0 gain, therefore, nothing to pay tax on?

 

[ivinsfan]

We paid the assessment via echeck and then filed our claim a month or so later. Yes, brought back to even. So does that mean $0 gain, therefore, nothing to pay tax on?

That's the way our C corp would do it but I don't know in your case...sorry...


If you file a Schedule for rental income I would just minus the check payment as an expense and report the insurance on the 1099 that's a wash...