If you’re involved in a disaster such as a hurricane, flood, or tornado, you may be able to deduct losses related to damage to your home or personal property. Here’s what the IRS wants you to know:
- Casualty losses can be deducted on your federal tax return. The IRS defines a casualty as “a sudden, unexpected, or unusual event.” A casualty can include natural disasters like hurricanes, tornadoes, floods, and earthquakes. Fires, accidents, thefts, or vandalism can also qualify. However, losses related to normal wear and tear, age, or normal threats (like termite damage) do not qualify for deductions.
- You cannot deduct losses that were reimbursed by insurance, and you must file a timely claim for reimbursement for any covered losses.
- Generally, you must deduct a casualty loss in the year in which it occurred. However, special rules may apply if you live in an area declared as a federal disaster area.
For more information on deducting casualty or disaster-related losses, contact a qualified tax specialist. If you would like a recommendation for a tax specialist, please do not hesitate to contact our office.