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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4545
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I had a fire in my house. Say my insurance estimated the

Customer Question

I had a fire in my house. Say my insurance estimated the loss at 200k and my own public adjuster estimated the loss at 300k. I negotiated with insurance and settled the claim at 250k payout. I also paid 15 k to my public adjuster. On my taxes can I deduct
the difference between what my adjuster said and the amount of settlement as well get a tax break for additional 15k paid to the adjuster ? Would I be able to get a reduction on property taxes (since it took 8 months to rebuild the house to a livable condition)
-- if yes what would be the amount?
Submitted: 2 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 years ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Yes, you can claim deduction to this loss to the extent of $100,000. The should NOT include the amount for which you have been reimbursed by the insurance. Only the left out amount should be claimed as loss. For example, in your case, if the damage is 300k and insurance has reimbursed you 200k, the loss you can claim would be of 100k. Please refer the following IRS document.

https://www.irs.gov/publications/p17/ch25.html#en_US_2014_publink1000173577

I believe, you are in NY State. Yes, you will get relief on the property tax bill. The current property taxes will be reduced for that portion of the property damaged or destroyed. This reduction will be from the date of the damage, and will remain in effect until the property is rebuilt or repaired.

For any doubts or questions on assessment procedures, you may reach out to the following contact details.

http://www.tax.ny.gov/help/contact/how_to_reach.htm

I am sure this would help. I wish you good luck.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 1 year ago.
THe IRS document you provided does not address my situation. In a nut shell -- whom IRS believes with respect to my loss: my estimator or insurance company estimator. Also does IRS is basing property loss based on "replacement cost" value of "actual cost value".
Expert:  Rakhi Vasavada replied 1 year ago.

Hello again.

The IRS will tend to believe your estimator if it revolves around fair value and estimation. It also takes replacement costs into consideration if your actual loss is properly documented and proved, which is obvious.

I am sure this would help. I wish you good luck.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 1 year ago.
Would you please support your answer with appropriate links as it is not clear where the info is coming from. Especially the phrase that IRS takes into "consideration" is not very comforting.
Expert:  Rakhi Vasavada replied 1 year ago.

Hello again,

Sorry if I did not conveyed myself clearly. As I said, the estimation is not really important. It may be yours or otherwise. So far as IRS is concerned, it usually looks into basis of your property. If the reimbursement amount that you received is HIGHER Than the basis of your property, you don't have a loss, and therefore CANNOT DEDUCT OR CLAIM irrespective of the replacement value.

However, if the reimbursement that you have is LOWER than the adjusted basis / basis of the property damaged, you can deduct or claim the DIFFERENCE, (basis / adjusted basis minus reimbursement) as a loss.

From what I understand from your situation, such losses are classified as "Nonbusiness Casualty and Theft" losses. You will have details here.

https://www.irs.gov/publications/p17/ch25.html

Let me know if this makes it clear. Or else, I shall opt out and set other expert assist you with this.

I am sure this would help. I wish you good luck.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards

Customer: replied 1 year ago.
As per per my initial question I am still looking for the answer whose adjustor/estimator irs believes. You also incorrect regarding property bill as I ha v e to wait until next year for reassesment. Please opt out.
Expert:  Rakhi Vasavada replied 1 year ago.

I am opting out so that some other expert can assist you with.

Warm Regards,