LA Fires Taxes and Insurance

[Henry Clark]

Folks this is meant as a beneficial post and not about good or bad positions.  

Anyone answering is not responding as a Tax accountant, Insurance expert or as a Financial advisor.   All situations are specific to individuals.

Our best wishes and empathy go out to those LA individuals and communities.

It’s been about 6 years since one of our storage locations was flooded for about 4 months.  2 feet over the roof.   Dramatic experience for both our tenants and us.  Had lots of questions and emotions.  All of us.  So I will pose some questions and also some experiences.  

Make sure the location is safe first.  

1.  Insurance-  replacement costs.  What question should one of these home owners ask?  For our flooded location luckily we had full coverage.   The buildings were still usable.  But since you don’t know about the concrete pads how they will settle they have full rebuild coverage.  If they didn’t have replacement cost, what should they do to capture value and get a loss writeoff?

2.  Insurance-  we were assigned an insurance consultant.  They worked between us and our insurance company.  They helped us get the best coverage.  Also prevented us from making wrong statements on our part which would have reduced the claim.

3.  Insurance-  we had 18 months of full lost income coverage.  Do these folks have temporary  overage for places to live?

4.  Insurance- personal property.  Separate from real property. Prior to clean up make an inventory even if burned.  Take 100’s of pictures even if small stuff.  Don’t do clean up until the insurers inspect.

5.  Insurance- clean up cost.  We got lucky the county picked up the waste dump pickup and dump fees. Would have cost us around 30,000.  See if the city or county will pick up dumpster or some of the cleanup fees.

6.  Insurance-  hookup and shut off costs. See if those can be covered for utilities.

7.  Insurance- coverage for new engineering, permitting, etc

8.  Insurance- new construction coverage. Normally your home owners or Blanket coverage would cover some of this. But make sure there is coverage for the cleanup and new Construction.

9.  Property taxes-  normally paid in a delayed basis.  See if the city and county will give a waiver.

10.  Property taxes-  ask for revaluation as soon as possible.

11.  Income taxes- ask if your  insurance claim not taxable income.   Is it like you sold your house and don’t have to pay for the profit?

12.  Income taxes- if needed can you use your 2 year primary residence deduction if a taxable event occurs.

13.  1031-  if any part of the insurance claim is a taxable event is there some way to do a 1031 with lenient time frame adjustments?  This would be federal relief.  Or this is a non issue if insurance coverage is not taxable.

Many other thoughts and input. Hopefully any BP members in the LA situation can benefit from the thought process.