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hi from just answer.
this was your principal residence, yes?
do you have homeowners coverage?
yes, but it caused us to be displaced and we are still displaced to date
were you doing the work or did you hire contractors?
we did recoup some of the funds via insurance settlement, but not nearly enough to cover the extra costs
and you settled with them?
we did settle with the insurance. the extra costs did not reveal themselves until we had moved further along in the project
and your homeowners didn't cover anything?
no, it did, it covered about 1/4 of the actual damage
My preliminary answer is yes, you can claim a casualty loss. I am looking for IRS backup, but I am finding that man-made disasters qualify.
so should I simply allow my accountant to make that decision
If your property is personal-use property or is not completely destroyed, the amount of your casualty or theft loss is the lesser of: The adjusted basis of your property, orThe decrease in fair market value of your property as a result of the casualty or theft
The IRS states that, “Damage, destruction or loss of property resulting from a sudden, unexpected or unusual event; the losses can result from natural or man-made disasters.”
You will have to reduce your loss by the insurance proceeds, and get an appraisal to support the reduced value of your home, but those figures will allow you to deduct a casualty for the economic loss.
ok, that is what I figured. the decrease in the fair market value and the amount of the costs incurred to repair are about the same. Is the loss limited to a certain amount?
no, maximum loss is your basis in your home less insurance reimbursements and $100.
$100? where does that figure come from?
there is a $100 deduction from any casualty.
got ya. thanks very much- i appreciate your quick response
then please click Accept, add a bonus if I earned one, and thanks from Just Answer.
one more clarification point. how is the loss handled? is a tax credit?
an itemized deduction, form 4684 to claim, Schedule A to summarize.
ok, ill be hitting the accept button now