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Tax question about Casualty & Theft Loss, probably
Posted on 10/11/12 at 1:19 pm
Posted on 10/11/12 at 1:19 pm
This past year, I was included in a class action suit, based on where I live. A chemical plant had a chemical spill long before I bought my property, which did affect my property (26 years ago). I got a bag of peanuts and a post card from the lawyer group from their new Tuscan villas for the event, but I'm wondering if I should claim this on my taxes. It's an event I'm sure I'd now have to disclose if I ever sell, and since it affects the resale value of my property, it seems like there should be some way to deduct it. What do you guys say?
2
Posted on 10/11/12 at 2:44 pm to bojabu
tricky one.....
Technically a casualty loss is defined as the decrease in the fair market value of the property immediately after the causualty or theft. The problem is the casualty occurred 26 years ago when you didn't own the property, so you would be hard pressed to demonstrate a decrease in value immediately after the casualty. I don't think you can just decide to use the date of discovery of the contamination as the date of the casualty. You also have to be able to document how you calculated your loss. Ideally with appraisals before and after the casualty. Another problem.
How much do you figure your loss to be?
There may be tax cases on this. There are many EPA Superfund sites where the owners of the land have had similar experiences. Maybe your tax guy can find a similar tax case that benefits you and go ahead and claim your loss. IDK, lets see what some other posters think. They have some bright minds on this board.
Technically a casualty loss is defined as the decrease in the fair market value of the property immediately after the causualty or theft. The problem is the casualty occurred 26 years ago when you didn't own the property, so you would be hard pressed to demonstrate a decrease in value immediately after the casualty. I don't think you can just decide to use the date of discovery of the contamination as the date of the casualty. You also have to be able to document how you calculated your loss. Ideally with appraisals before and after the casualty. Another problem.
How much do you figure your loss to be?
There may be tax cases on this. There are many EPA Superfund sites where the owners of the land have had similar experiences. Maybe your tax guy can find a similar tax case that benefits you and go ahead and claim your loss. IDK, lets see what some other posters think. They have some bright minds on this board.
Posted on 10/11/12 at 3:00 pm to bojabu
I dont see how this would qualify for a casualty loss.
The chemical spill was a known event before you purchased you property, therfore one could argue the negative effect on property value would have been built in on the purchase date.
The chemical spill was a known event before you purchased you property, therfore one could argue the negative effect on property value would have been built in on the purchase date.
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