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Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
Experience:  CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.
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Is the loss by fire of the entire structure and personal property

This answer was rated:

Is the loss by fire of the entire structure and personal property deductible on an individual 1040, provided that insurance proceeds therefrom are reported as income?

Chea Romine :

Yes you are able to take a deduction for a loss of home and personal property due to fire. There are a couple rules though:

1. You must file a timely claim with insurance for reimbursement.
2. You must reduce your loss by the amount of reimbursement you receive.

If you meet those two standards you may deduct the loss on your Schedule A. You take your loss and subtract $100, then there is a phaseout of 10% of your adjusted gross income. Whatever is left is your deduction. I will use some numbers as an example.

The structure and personal property is worth 50k and insurance reimburses 30k. You take the 50k amount and subtract the 30k so you are left with 20k. Now you subtract $100 so we have 19,900. Let's say your AGI is $75k so 10% is 7500 and we subtract that. Your deduction would be 19,900 - 7500 or 12,400.

Feel free to post and follow up or further clarification.

Customer:

No answer received. "expert is offline."

Chea Romine :

Are you not able to see the answer above?


 

Customer:

Correct.

Chea Romine :

I will repost.



Yes you are able to take a deduction for a loss of home and personal property due to fire. There are a couple rules though:

1. You must file a timely claim with insurance for reimbursement.
2. You must reduce your loss by the amount of reimbursement you receive.

If you meet those two standards you may deduct the loss on your Schedule A. You take your loss and subtract $100, then there is a phaseout of 10% of your adjusted gross income. Whatever is left is your deduction. I will use some numbers as an example.

The structure and personal property is worth 50k and insurance reimburses 30k. You take the 50k amount and subtract the 30k so you are left with 20k. Now you subtract $100 so we have 19,900. Let's say your AGI is $75k so 10% is 7500 and we subtract that. Your deduction would be 19,900 - 7500 or 12,400.

Feel free to post and follow up or further clarification.


Customer:

Still no answer.

Chea Romine :

Let me switch to Q&A to see if that helps.

Can you see it now?
Customer: replied 4 years ago.

Yes, I have received your answer and THANK YOU! XXXXX should have told you initially that this was a SECOND home, not my principal residence. Does that make a difference?

As long as it was not a rental and just a second home it is treated the same.
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