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Category: Tax
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Experience:  over 40 years experience in tax matters
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my property suffered considerable loss due to landslide stemming

Customer Question

my property suffered considerable loss due to landslide stemming from the huge March 30,2010 storm that caused major flood damage from RI through CT. FEMA declared the area a Federal Disaster area.

Repairs to our property cost $25,000 one half of which was funded by the Town's insurance carrier due to their negligence in providing proper storm water management from the town road abutting the property.

Do I qualify for a deduction without the usual restrictions (5 of gross income)? I see this quote from an internet site "But according to the National Disaster Relief Act, property losses in federally declared disaster areas are not subject to the 10% of adjusted gross income limit."

Thank you
Submitted: 4 years ago.
Category: Tax
Expert:  CGCPA replied 4 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

Yes you are exempted from the 10% of AGI limits. Here is the full text of the item to which you refer (from the IRS). Please pay careful note that you must still reduce your loss by $500.

<table border="0" cellspacing="0" cellpadding="0">

FAQs for Disaster Victims - Calculating a Casualty Loss Under the National
Disaster Relief Act of 2008

(03/09) Q: How do I determine my deduction for a casualty loss that
resulted from a federally declared disaster.

A: How you determine a disaster-related casualty losses has
changed as a result of the National Disaster Relief Act of 2008, which is
effective for disasters occurring after December 31, 2007, and before January 1,

Under prior law, individuals who suffered casualty losses as a result of a
Presidentially declared disaster were required to reduce the loss from each
casualty event by $100 and reduce the total of their casualty losses for the tax
year by 10 percent of their adjusted gross income. In addition, these
individuals were required to claim their casualty losses as an itemized

The new law changes the amount by which individual taxpayers must reduce
their personal casualty losses from each casualty event from $100 to $500. This
change is effective for taxable years beginning after December 31, 2008. The
reduction amount returns to $100 for taxable years beginning after December 31,

The new law also removes the 10 percent of adjusted gross income limitation
for net disaster losses and allows individuals to claim the net disaster losses
even if they do not itemize their deductions.

To qualify, a loss must be attributable to a federally declared disaster and
occur in an area determined by the President to warrant assistance by the
federal government under the Stafford Act. The deduction is limited to the "net
disaster loss" which consists of the excess of personal casualty losses
attributable to a federally declared disaster over personal casualty gains.

Information on disaster areas may be found at the Federal
Emergency Management Agency (FEMA) website

These changes to the law do not apply to the casualty losses in the
Midwestern disaster areas declared during the period beginning on May 20, 2008,
and ending on July 31, 2008. See Publication 4492-B,
Information for Affected Taxpayers in the Midwestern Disaster Areas

References/Related Topics

Per the IRS web site, this information was updated October 26, 2011. Therefore it is current.

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