This bill excludes from gross income, for federal income tax purposes, payments received from a state catastrophe loss mitigation program by an individual for the purpose of making improvements to the individual’s property that mitigate the impact of certain disasters.
Under current law, individuals may exclude from gross income, for federal income tax purposes, payments received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) for hazard mitigation. (Some exceptions apply.) Further, under current law, such payments do not increase the basis of the property for which the payments are made.
The bill allows a similar exclusion from gross income for certain payments received by an individual from a program established by
a state (or any political subdivision or instrumentality of the state), a joint powers authority, or an entity that was established by the state to provide essential or basic property insurance and is regulated by the state. Under the bill, such payments must be for making improvements to the individual’s property for the sole purpose of reducing damage that would be done to the property by a windstorm, earthquake, flood, or wildfire.
Finally, the bill provides that such payments from a state catastrophe loss mitigation program do not increase the basis of the property for which the payments are made.