If you bought an Ankeny, IA duplex with the intent of renting it out, then you’ve established a business. Businesses are liable for damages and injuries, so they need the proper insurance. Umbrella policies represent extra coverage when a court-ordered award is granted. Are these insurance premiums a tax write-off?
Yes. These are considered business expenses. An umbrella policy acts as a supplement to a business’ regular insurance and so is tax-deductible. That doesn’t go for a percentage of the premiums, it goes for the entire thing. Maschoff Insurance wants you to know these things about umbrella insurance as a tax write-off.
When This Isn’t The Case
A personal umbrella policy can’t be used to benefit a business; you’d have to purchase a commercial umbrella policy. This isn’t the case when you own multiple properties that you rent out.
It’s a gray area requiring professionals well-versed in commercial tax deductions, to wit: technically, the properties constitute a business, but under some circumstances, you can include them on a personal umbrella policy. Here’s a pro tip: Get an accountant who understands where the line between personal and business tax write-offs is located.
Business umbrella policies are often written off due to their “necessary” nature, which is self-explanatory. If this policy is commercial, it could be entirely deductible. If only half the umbrella covers Ankeny, IA rental properties, then only half the premiums can be deducted.
Some landlords form an LLC when they own multiple properties. In the case of an accident, the insurance sometimes isn’t enough. The landlord with an umbrella policy would be covered.
Schedule A Consultation Today!
There are a few areas of umbrella insurance and tax write-offs that aren’t quite as black-and-white as we would wish. When you have questions about these and other umbrella insurance areas, call Maschoff Insurance or come into the office to learn more about it.