FEMA Flood Insurance

[mrbill]

Client disputes being in a FEMA designated Flood Zone. It will cost approx. $2,500 for surveys to measure the property height, etc. to contest the designation. Would this be a schedule A deduction, or an add on to the basis. Thanks,

[erchess]

Capitalize

I believe that the safe thing to do is add it to basis. I know of nothing that would allow Sch A deduction for surveyor's fees under any circumstances. Legal fees of course are deductible if they pertain to the preservation of income but not as far as I know to cutting expenditures other than when one is being sued.

I am curious about why the person minds being in a declared flood zone. Is the rate for flood insurance going to change materially? I belong to the school of thought that everyone should have flood insurance because regular insurers are allowed to not pay off for water damage. (I personally think an item should be insured if one premium has been paid and if insured then either it's pristine and new or the insurance company pays to make it so less any unpaid premiums, period end of story. And yeah I do mean if an insured car needs gas and oil or an insured house needs painting the insurance company pays. But such is not the law. To me flood insurance at whatever rates are required is a given.)

[Kram BergGold]

Agree

Add to basis.

[taxxcpa]

Flood insurance

I had some property in the 100-year flood plain, but later it was decided that it was NOT in the flood plain. I did nothing to get it changed, but I was allowed, then, to drop the flood insurance.

It would probably be cheaper to pay the insurance than to gamble on the possibility of a survey proving it is not in the flood plain.

[mrbill]

FEMA Flood Insurance

Thanks for the replies, and I agree (basis). Client stated that she was trying to re-finance, and the flood zone designation was some some of a hinderance.

[ChEAr$]

Well I just don't see it even as an addition to basis. The expenditure only affects insurance premiums anyway.

[MAJ]

Flood Insurance...

Flood Insurance - The risk --
Did you know Flood Insurance only pays if there's a full FLOOD. Example. I live across from the lagoons. I am NOT in a flood zone (go figure).

A few years ago we had a certain Nor-Easter - Lots of snow followed by lots of rain - the fast melt and nor-easter - high tide - were perfect.

I had 8 inches of water in my basement. Because the water seeped up through the ground and did NOT pour in through the windows it is NOT considered a flood.

However, if you have a sump pump and it fails to keep up with the water or breaks your homeowners will cover it. Also, if a pipe burst in the basement or the hot water heater breaks/leask - that too should be covered.

Insurance - Love to hate it!!