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Tax write offs for people who flooded?
Posted on 1/15/17 at 8:59 pm
Posted on 1/15/17 at 8:59 pm
Anyone have any info on this? I've heard some say you can write of losses as a result of the flood and some say it's more trouble than it's worth
Posted on 1/15/17 at 10:29 pm to Glock17
More trouble than it's worth? No, that's BS. If you had flood damage to your home and/or personal property, you would be insane to not write it off on your taxes. It's an itemized deduction (subject to 10% of AGI + $100). If you suffered a $20K loss and your AGI is $100K, you can reduce your taxable income by $9,900. What's complicated about that?
Posted on 1/16/17 at 8:24 am to Taxing Tiger
I've saved receipts for everything I've purchased to replace what we lost, so I'm assuming that'll be sufficient documentation for the write offs?
Posted on 1/16/17 at 10:18 am to Taxing Tiger
But what if the majority of my purchases are in 2017 ( furniture ect) to replace items lost in 2016
Posted on 1/16/17 at 10:35 am to Kajungee
THats a good question... we purchased most all of our contents in 2016, but we didn't pay our contractor in 3 separate draws.... 90% of the work was done in 2016 but the final payment will be made in 2017
Posted on 1/16/17 at 7:06 pm to Glock17
You're simply using the purchases, whether in 2016 or 2017, to approximate what your loss was in August of 2016. If you had flood insurance, you may be able to get a better idea of what your loss was from the insurance adjusters report. Either way, the goal is find a good way to approximate the decline in fair market value if your house and personal property. Something else to consider...if the fridge you lost was 5 years old, the value of a new one wouldn't necessarily approximate your loss of the old one. You'd want to factor in depreciation.
Posted on 1/16/17 at 8:27 pm to Glock17
Edit: just saw taxingtiger comments. I'm guessing he/she may be tax professional given the name.
I hope a tax professional will chime in on this.
I didn't flood but was at a lunch and this question was asked. A CPA said there are no deductions you can take for personal property losses due to flood. If you had a business that operated from the home there were some things you could do, but if only your home there was nothing you could deduct.
I may have misheard the conversation, but I don't think so.
I hope a tax professional will chime in on this.
I didn't flood but was at a lunch and this question was asked. A CPA said there are no deductions you can take for personal property losses due to flood. If you had a business that operated from the home there were some things you could do, but if only your home there was nothing you could deduct.
I may have misheard the conversation, but I don't think so.
This post was edited on 1/16/17 at 8:29 pm
Posted on 1/16/17 at 9:08 pm to tigers win2
quote:
A CPA said there are no deductions you can take for personal property losses due to flood.
Hope that's not your CPA.
Posted on 1/16/17 at 10:09 pm to tigers win2
That CPA would be wrong. As mentioned above, you can deduct the lesser of (1) your basis in the property lost or (2) the FMV decline of the property. Take that amount, less insurance proceeds, less $100, less 10% AGI.
Posted on 1/17/17 at 12:59 am to Gainesville_Dawg
I read on the IRS website that it's no longer $100 and 10% of your agi. The new rule is a flat $500 dollats.
So.. I'd check with a cpa.
I'll look for a link and update this post if I find it.
So.. I'd check with a cpa.
I'll look for a link and update this post if I find it.
Posted on 1/17/17 at 8:19 am to Gainesville_Dawg
quote:
you can deduct the lesser of (1) your basis in the property lost or (2) the FMV decline of the property. Take that amount, less insurance proceeds, less $100, less 10% AGI.
We had just purchased the house 2 months before the flood so I know what it was worth then. The tax assessors office used a 20% decline in value for 2016 tax purposes, which would be close to 50K. If I look at total damage to the structure, I'm probably looking at closer to 80K not including personal property.
We also did not have any insurance, but did receive some FEMA money. I don't know how that would factor in.
This post was edited on 1/17/17 at 8:22 am
Posted on 1/17/17 at 8:28 pm to tigers win2
This is terrible advice. Hopefully you misheard him. Home, contents, landscaping, etc. All would be eligible.
Regarding the 10% of AGI, we (our firm) contacted Bill Cassidy multiple times trying to get that waived, but they avoided the question. That threshold was waived for Katrina. It's chicken $hit that they won't waive that threshold for this disaster.
Regarding the 10% of AGI, we (our firm) contacted Bill Cassidy multiple times trying to get that waived, but they avoided the question. That threshold was waived for Katrina. It's chicken $hit that they won't waive that threshold for this disaster.
Posted on 1/18/17 at 7:42 pm to Taxing Tiger
Isn't the "loss" amount offset by any aid received? FEMA money, grant money, insurance?
Posted on 1/18/17 at 9:03 pm to Glock17
As I understand it...
If anyone had severe flood damage and had little or no insurance, they should definitely explore taking a casualty loss deduction on their tax return. Documentation will be an issue. No documentation = No tax deduction. The tax loss is the decrease in value of the home and personal property, not the cost to replace or repair. Calculating the decrease in value will involve estimates and be tedious. You will become very familiar with IRS publication 547 concerning casualties losses. Print it out and start documenting your loss.
Bullet Points:
The loss in value occurred in 2016 and is deductible in 2016 regardless of when you paid your contractor or purchased the new TV.
Flood insurance proceeds and FEMA grants both decrease the total amount of your loss.
The loss is limited to the excess over 10% of your AGI.
You can use the cost to repair your home as a method of determining the decrease in value if there were no material upgrades made to your home.
Personal property needs to be accounted for on a item by item basis. The cost to replace the item is not the decrease in value unless the item was brand new. Example: The decrease in value of that 5 year old 60" flatscreen TV you put on the curb is not the cost to replace or it's original cost. The loss is the fair market value immediately preceding the flood and the value after the flood (zero). You paid $1000 for it 5 years ago, you replaced it last month for $750, and a similar used tv would sell on Craigslist for $250. Your loss is $250.
Sorry about your house. I feel your pain. This tax calculation is difficult, but can net you some money from the IRS. There is nothing illegal or unethical about it if you use photos and reasonable estimates. Document as much as possible.
If anyone had severe flood damage and had little or no insurance, they should definitely explore taking a casualty loss deduction on their tax return. Documentation will be an issue. No documentation = No tax deduction. The tax loss is the decrease in value of the home and personal property, not the cost to replace or repair. Calculating the decrease in value will involve estimates and be tedious. You will become very familiar with IRS publication 547 concerning casualties losses. Print it out and start documenting your loss.
Bullet Points:
The loss in value occurred in 2016 and is deductible in 2016 regardless of when you paid your contractor or purchased the new TV.
Flood insurance proceeds and FEMA grants both decrease the total amount of your loss.
The loss is limited to the excess over 10% of your AGI.
You can use the cost to repair your home as a method of determining the decrease in value if there were no material upgrades made to your home.
Personal property needs to be accounted for on a item by item basis. The cost to replace the item is not the decrease in value unless the item was brand new. Example: The decrease in value of that 5 year old 60" flatscreen TV you put on the curb is not the cost to replace or it's original cost. The loss is the fair market value immediately preceding the flood and the value after the flood (zero). You paid $1000 for it 5 years ago, you replaced it last month for $750, and a similar used tv would sell on Craigslist for $250. Your loss is $250.
Sorry about your house. I feel your pain. This tax calculation is difficult, but can net you some money from the IRS. There is nothing illegal or unethical about it if you use photos and reasonable estimates. Document as much as possible.
Posted on 1/19/17 at 10:09 am to Glock17
Read the instructions on Form 4684 of the 1040. Anything you need to know will pretty much be in the instructions.
Also, keep in mind
So it may be advantageous to amend your 2015 return and take the deduction there if you had unusually high income in 2015 for whatever reason (BP settlement, etc).
Also, keep in mind
quote:
that if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the casualty loss as having occurred in the year immediately preceding the tax year in which the disaster happened, and you can deduct the loss on your return or amended return for that preceding tax year.
So it may be advantageous to amend your 2015 return and take the deduction there if you had unusually high income in 2015 for whatever reason (BP settlement, etc).
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