Are Hurricane Rita insurance recovery proceeds taxable?

Question

If my house was destroyed by Hurricane Rita and I am paid under my homeowner's insurance

X for Property damage
Y for contents replacements and
Z for living expenses,

is any of this taxable as income?

Thanks.

Answer 1

If reimbursements to you exceeded what you spent, then the overage would be taxable, also if you had deductions on your tax return in one year, and the recovery proceeds in another, then the recovery proceeds would be taxable, since they occured in separate years, and you took write-offs previously.

Answer 2

To the extent that the money makes you whole again, no it is not taxable. If your insurance reimbursements exceeded your losses, the excess would be taxable. That's an extremely rare occurrence.