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Are home insurance claims taxable?
I’ve finally received the payout for a home insurance claim after several months. I’m having trouble finding information online about the taxes related to this claim. Are home insurance claims taxable?
Sadie Lovemore · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry you’re having trouble finding the information you need! Home insurance claims are not typically taxed because it doesn’t increase your income—it replaces what was lost.
While the IRS levies taxes on your salary and other income,
home insurance
claims doesn’t qualify as income because it doesn’t increase your wealth. If you’ve made a claim for damages to your home, you’re simply trying to restore the state of your assets. With that in mind, there are some exceptions:
- Home insurance claims might be taxable if you have extra money left over. In other words, the payout adds to your wealth so the IRS can treat it as income.
- You might need to pay taxes on any claims involving a rental property, as those funds are considered a source of income.
If you’re receiving a large check, it might give you peace of mind to speak to a tax professional about how to document it and avoid triggering an audit. Remember, the IRS only cares about realized capital gains.
It’s always nice to keep more money in your pocket, so make sure you’re not paying too much for home insurance with
Jerry
. A licensed broker that offers end-to-end support, the Jerry app gathers quotes from top providers, helps you switch plans, and even helps to cancel your old policy. Even better—Jerry will help you bundle your home and auto policies for maximum savings. View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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