Wind Protection Grants Are Tax-Free Says IRS

State grants to Florida homeowners to strengthen their houses against storm damage will not be reported as taxable income to the federal government, said Florida Chief Financial Officer Alex Sink.

The grants involved are awarded to homeowners through the My Safe Florida Home (MSFH) program.

Ms. Sink, who heads the Department of Financial Services, made the announcement after receiving a Letter Ruling from the Internal Revenue Service (IRS) stating that MSFH grants will be excluded from “gross incomes for federal income tax purposes.”

“Floridians taking personal responsibility to harden their homes and receive a grant from the My Safe Florida Home program shouldn't be hit with an additional tax bill in January 2008,” said Ms. Sink. She is in charge of the MSFH program.

Ms. Sink said she commended the IRS for granting her request made in June that mitigation grants should not be considered part of a homeowner's income.”

Without the ruling, the DFS said matching grant recipients could have been facing a tax liability of $1,250 on a $5,000 MSFH grant, based on the IRS Flat Tax calculation rate of 25 percent.

With $8.6 million in grants issued to date, Ms Sink's announcement said, there has been a potential saving to Floridians of approximately $2.15 million in additional federal income taxes.

The MSFH program resumed offering wind inspections and expanded statewide in April 2007 after conducting a pilot program during the previous year. During the last seven months, the MSFH program has performed approximately 114,000 free wind inspections–and a total of 127,816 inspections since the program began.

Approximately 15,985 homeowners have been approved to receive matching grants and are working with the MSFH program to harden their homes, DFS said.

Statewide, the program has issued a grand total of more than 2,637 grants to homeowners for more than $8.6 million.

Ms. Sink reported that the vast majority of homeowners who have received free wind inspections from the MSFH program are eligible for discounts on their wind insurance premiums without making a single improvement to their homes.

To date, 95,807 (76 percent) of participating homeowners are eligible for an average discount of $210 on their wind insurance premiums, based on the current structure of the home during the free MSFH wind inspection. Over the last seven months, the program has alerted Floridians to a potential savings in windstorm insurance premiums totaling more than $20 million.

Any Floridian who lives in a single-family, site-built home is eligible for a free wind inspection through the program.