Get the Maximum Benefit from a Casualty Loss Deduction1 min read
Typically, you claim a casualty loss in the taxable year the disaster happens. But, if you’re in a federally declared disaster area, amending your prior year return is an option. To receive the maximum benefit in either case the amount of your loss will need to be calculated. The following guidelines can help you prepare.
File an insurance claim. File a timely claim for your property with your insurance company.
Get an appraisal. The decline in fair market value caused by the casualty will be determined by an appraisal. The tax rules require that you measure the difference between what your home or property would have sold for before the damage and what it was likely to sell for after the damage.
Establish basis. Adjusted basis is what you originally paid for the damaged property, plus any improvements that were made. You may have to recreate them using reasonable estimates or the best information you have if your records were lost in the casualty.
Keep receipts for repairs. Sometimes, repairs you make to restore your property to pre-casualty condition can be used as an indicator of the decline in the fair market value of the property.
If you need additional guidance, please give us a call. We are here to help you resolve any tax issues in the aftermath of a casualty.
Here are a few additional articles you might be interested in:
No one starts a business hoping that it will fail, yet a quick check of business statistics shows that half of all businesses will. Large businesses have teams of experts who comb through complex reports to make decisions that affect hundreds of employees and ensure...read more
The five questions you should consider before taking the plunge It’s been your dream for as long as you can remember. Maybe your entrepreneurial juices started to flow when you were a youngster and you opened a lemonade stand or you had a paper route. Perhaps the...read more
Even with the myriad of tax changes that went into effect for 2018, there are still a few go-to tax moves that everyone should make a priority in early 2019. Checking that the correct amount is being withheld from your paycheck in 2019 is a sure-fire way to be certain...read more