Property Damage Tax Deduction (Casaulty Theft and Loss)

If you have lived in Wilmington, North Carolina for a substantial amount of time, you are familiar with the damage hurricanes can cause. If you suffer damage to your home, you may be able to deduct the losses that you incur.

What is a casualty? A casualty is a sudden, unexpected or unusual event. This could include hurricanes, tornadoes, floods, but also fires, accident, thefts and vandalism. This would not include the normal wear and tear of your home including termite damage.

One other thing to keep in mind, is that if your insurance covers this damage, you must reduce the loss by what was reimbursed.

After determining the loss, you must reduce each instance by $100. If your home got broken into two different times, you would subtract the $100 from each instance. Note, this is not involving pieces of property but actual instances.  You will then reduce the amount of the casualty loss by 10% of adjusted gross income (AGI). AGI is the last number on the first page of your tax return, Form 1040. You will report the loss on Form 4684, but it will flow to Schedule A (itemized deductions). If you do not itemize and this loss is not enough to push you over the threshold to itemize, you will not actually see this loss on the tax return.  If you have suffered casualty losses and need help with the preparation of your tax return, be sure to contact a professional to ensure that you are reporting properly.