September 22, 2020Share:
President Trump has declared Mobile, Baldwin and Escambia counties disaster areas which means casualty losses from Hurricane Sally may be deductible.
The total casualty loss is the decrease in the fair market value of the property, but not more than your basis (i.e. cost) in the property. Before and after appraisals of the property are typically the best way to determine the loss, but the cost of repairs can be used as a good faith estimate. The casualty loss can only be deducted if a timely insurance claim has been filed for any such loss covered by insurance. The insurance and other reimbursements must be subtracted in calculating the loss.
The total casualty loss is reduced by $100 and is subject to 10% of Adjusted Gross Income for personal use property. These deduction limitations do not apply to losses of business-use property or income-producing property.
The declaration of a federally declared disaster area also allows taxpayers residing in the affected areas to elect to claim the casualty losses on their 2020 or 2019 tax returns.
Please contact us if we can be of assistance in calculating your Hurricane Sally casualty loss.