Excess Insurance Premiums Paid by South Carolina Taxpayers
New Deductions and Credits for South Carolina Taxpayers
South Carolina offers deductions and credits for those whose home insurance premiums are "excessive." In a nutshell, these deductions and credits include the following:
Catastrophe Savings Account Deduction, Addition, and Tax – A homeowner may deduct contributions to a Catastrophe Savings Account to cover losses to their legal residence against hurricane, rising floodwaters, or other catastrophic windstorm event damages. The size of the contribution is limited based on the amount of insurance deductible, if any, exists. Credits for insured homeowners range from $2,000 to $15,000. For those self-insured who fly naked (no insurance) the limit to contribute to the account is $250,000. Cashing in the Catastrophe Savings Account for non-damage restoration will be taxed, unless the residence is sold, the account is closed after reaching the age of 70, or the account is closed by the surviving beneficiary of the taxpayer who set up the account or his spouse.
Residential Retrofit Tax Credit – Since January 1, 2007, a homeowner had a law that allowed a credit for costs incurred to retrofit a residence to make it more resistant to loss due to hurricane, rising floodwater, or other catastrophic windstorm event. The credit is 25% of the cost incurred, but not more than $1,000. South Carolina also offers a credit for sales or use tax paid for tangible personal property used in the residential retrofit. This credit is 6% of the purchase price of the tangible personal property, but not more than $1,500.
Excess Insurance Premium Tax Credit – Beginning January 1, 2007, a homeowner may claim an income tax credit for excess premium paid during the year for property and casualty insurance on his or her legal residence. Excess premium is that portion of the premium that is greater than 5% of taxpayer’s adjusted gross income. The maximum credit permitted each year is $1,250.
Good luck finding these deductions or credits on the tax forms. South Carolina tax forms appear to be written on a “need-to-know” basis, and good thing that we, at FOUNTAINHEAD TAX LLC, know.
Have any questions? Call us at Fountainhead Tax LLC. We can help.