Homowners insurance reimbursements and income tax

[DrCube]

I had a house fire last fall and we just finally got our check for the contents of the home (we got a check for repairs in February). My question is, do I have to pay any (income or otherwise) tax on this money?

I did check Google first. IRS.gov points me towards Publication 525, Taxable and Nontaxable Income. Lots of mentions of life, health, and unemployment insurance. None for house insurance. However, there is this:

Casualty insurance and other reimbursements. You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. See Publication 547.

It’s not specifically about house insurance, but it does say “other reimbursements”. Publication 547 talks about figuring gains or losses. So, I’m not 100% sure, but it seems like I can just ignore this whole debacle on next year’s return. But, not being sure, I figure I’d ask the experts of the Dope before/in lieu of clarifying with a tax preparer or accountant.

[Omar_Little]

Homeowner insurance is casualty insurance.

Unless your insurance reimbursement is greater or less than your actual loss, there should be nothing to report. If the value of the items you lost is greater than your insurance reimbursement, you may be eligible for an additional deduction, for the unreimbursed amount.

And seldom, but sometimes, your insurance reimbursement may be greater than the value of the amount of your loss, (i.e. your insurance covered replacement cost at new values, but the items you lost were of less value.) In those situations you may have a reportable gain.

[Really_Not_All_That_Bright]

Insurance payouts for economic losses are non-taxable. Anything you receive for non-economic loss (basically, pain/suffering, which will be zero, assuming we’re talking about your own homeowners’ policy) is generally taxable. Omar’s post is right on.

[pkbites]

@Omar_Little

Homeowner insurance is casualty insurance.

Unless your insurance reimbursement is greater or less than your actual loss, there should be nothing to report. If the value of the items you lost is greater than your insurance reimbursement, you may be eligible for an additional deduction, for the unreimbursed amount.

And seldom, but sometimes, your insurance reimbursement may be greater than the value of the amount of your loss, (i.e. your insurance covered replacement cost at new values, but the items you lost were of less value.) In those situations you may have a reportable gain.

All this.

It’s rare for the reimbursement be greater than the loss so that one would owe taxes but if that does happen you report it as a capital gain on Schedule D, and on Form 4684.