Today TaxMama hears from the Mike in Florida, who tells us, “We received an assessment from our condo association. This assessment was to repair damage caused by hurricane Wilma when it hit Florida. Can we report this assessment as a casualty loss on our tax return? If we can, what schedules should we use to report the damage? I tried to find an answer on the Internet but could not find any details.”
Yes. You may report it. Sort of.
It’s a little more complicated than that.
Actually, I am surprised you had such a hard time finding information. On the home page of the IRS site there’s a link to information for disaster victims. On the page it takes you to, there’s a section for Help for Individuals. I found this link to the IRS Disaster Relief Page, which points you to the forms and publications you need. https://www.irs.gov/newsroom/article/0,,id=108362,00.html
So, please remember, if you’ve got any disaster-related question, the IRS site is an excellent place to explore.
For now, the casualty loss form is Form 4684, here:
You may even fill it in and save it on your computer.
To claim a casualty loss, you need to have a loss in value, not just a cost to repair.
You must have written evidence to back up your claim of the market value of your condo unit before Wilma, and the present value, after Wilma. That’s for lines 5 & 6.
Under the circumstances, you may be able to have a real estate agent friend pull comparable sales summaries from the week before the storm and the week or month afterwards. (No, silly,
you don’t want sales figures now – the prices are rising. They’re not as low as when everyone was in shock.)
You’d enter the cost of repairs on line 1 – the association assessment and any other damage you had to your unit that you paid to fix. Deduct any insurance reimbursement.
I know that this is an assessment from your association for damages to the common areas and/or building exteriors. But, the damage did reduce the value of each unit, too. So, you should be able to get the valuation reduction information that you need. (Does this make any sense?)
If you happened to get FEMA money to cover your living expenses, do not include it on this form as a reimbursement. This wasn’t for damages – it was for food, supplies and temporary housing.
If you got an SBA loan providing funds to cover the repairs, do not include that as a reimbursement, either. It’s a loan. You have to pay it back. Other than that, it should be cinch, right?
Yeah. Uh huh… Good luck getting everything back to normal!
Remember, you’ll find answers to questions about disasters and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d get special tips that aren’t published anywhere else. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- IRS Form 4684 :: Casualty Losses
File Download (2:47 min / 0.6 MB)