Today TaxMama hears from Sandra in Texas, with this unusual situation. “I owned two rental properties; but one was accidentally torn down by the city. It had damage due to hurricane Ike. Can I take the value of this property off my taxes? Can I take it as a loss?”
[Remember, use the Resource Box below for the working links.]
If the city tore it down, they should be paying you for it, right? So you will be picking up some income from the city, as well as insurance reimbursements due to the hurricane damage.
The answer is complicated. It involves casualty loss rules.
It involves condemnation rules and replacement opportunities.
And there are special rules and tax benefits for victims of Hurricane Ike. In fact, you may even be able to amend the tax return for the year before the damage to report the casualty loss.
You have a lot of potential tax benefits available to you. You need someone to sit down with you and look at all the facts and all the numbers.
Casualty losses are complicated. In fact, the first time I filed one for a partnership (who had a building that burned down three weeks after they bought it), the return was audited. Of course everything turned out just fine. But…who wants an audit?
And remember, you can find answers to all kinds of questions about Casualty Losses and other tax issues, free. Where?
Where else? At TaxMama.com.
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- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS Topics :: Casualty, Theft and Disaster Losses
- IRS Publication 544 :: Chapter One – Sales and Other Dispositions of Assets
- IRS Newsroom :: Texas Hurricane Ike Victims Qualify for IRS Disaster Relief