Louisiana: Tax, Premium Advantages Available for Retrofitting Structures

Louisiana residents can apply for a state tax deduction for retrofitting their homes, as well as an insurance premium discount for building or retrofitting your home to comply with the Louisiana State Uniform Construction Code.

The Louisiana Department of Insurance and the state Department of Revenue have rolled out an ad campaign urging consumers in that state to take advantage of tax and premium discounts for making their homes and buildings more hurricane resistant.

State Tax Deduction

The state tax deduction stems from a statute enacted in 2007 that allows a construction code home retrofitting deduction equal to 50 percent of the cost paid or incurred for the retrofit on or after January 1, 2007, less the value of any other state, municipal or federally-sponsored financial incentives for the cost paid, limited to $5000.

The taxpayer must claim the homestead exemption for the home being retrofitted and the home cannot be rental property.

The tax deduction can be no more than $5,000 per retrofitted residential structure and is claimed on the tax return for the year in which the work is completed.

Proof that the retrofit complies with the State Uniform Construction Code (keep receipts for purchased items installed and labor costs for retrofit – no inspection is required), documentation of the cost of the project, and assurance that the project was voluntary as defined by the law, must be retained by the taxpayer.

A brochure on the state tax deduction is found at the Department of Insurance web site at: http://www.ldi.state.la.us/consumers/misc_pubs/Residential_Property_Storm_Mitigation.pdf

The Department of Revenue Bulletin No. 09-077, Construction Code Voluntary Retrofitting Deduction information is found at:
http://www.rev.state.la.us/forms/lawspolicies/RIB09007.pdf

Insurance Premium Discounts

Insurance premium discounts for state uniform construction code home retrofit or new home construction are available when:

• An owner builds or retrofits a one or two-family owner occupied home or modular home to comply with the requirements of the State Uniform Construction Code, and/or
• An owner installs damage mitigation improvements or retrofits their one or two-family owner occupied home or modular home utilizing construction techniques demonstrated to reduce the amount of loss from a windstorm or hurricane.

Each insurance company has established savings amounts allowed to homeowners for the various storm mitigation building techniques that are incorporated into a home as either a retrofit or new construction.

Homeowners are advised to contact their insurance company or agent for details and any necessary forms.

Inspection and certification must be performed by a building code enforcement officer, registered architect or engineer, or a registered third-party provider authorized by the Louisiana State Uniform Construction Code Council to perform building inspections.

For a list of registered third party providers, visit http://www.dps.louisiana.gov/lsuccc/.

Federal Hurricane Tax Deduction

A federal hurricane tax deduction is also available for uncompensated damages from Hurricanes Ike and Gustav. This tax-relief package for hurricane victims allows them to claim hurricane damages on their taxes for 2008 and is designed to compensate for the additional expense many incurred due to named storm deductibles homeowners faced with damages from Hurricanes Gustav and Ike in September 2008.

This tax relief package allows taxpayers to claim damage that exceeds $100 on their federal taxes for 2008. If property owners had uncompensated damages from Hurricanes Ike or Gustav, they may still amend their federal tax filing for 2008.

Consumers can refer to IRS Pub 547 for tax year 2008 to get the details on the Federal Hurricane Tax Deduction: http://www.irs.gov/publications/p547/index.html

Source: Louisiana Department of Insurance

Topics Catastrophe Louisiana Hurricane Construction