The Internal Revenue Service (IRS) offers a tax deduction for home casualty losses. This is an itemized deduction, so applicability depends on the personal finances of a taxpayer. Deductions decrease taxable income and the amount of tax due, and can therefore be useful to a home owner. This blog provides tips on MA home casualty loss tax deductions.
Definition of a Casualty Loss
The IRS considers a casualty loss as the “damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.” It can occur with natural disasters such as earthquakes or man-made ones such as acts of terrorism. There are other restrictions provided in IRS Publication 547: Casualties, Disasters and Thefts.
When to Take It
If the event took place during an presidentially declared disaster, then you can alter your tax return from the last year to deduct the damage. This may result in a tax refund. Otherwise, home owners must delay until the next tax filing.
Calculating the Deduction
First and foremost, the deduction is strictly applicable to expenses not covered by insurance and other resources. The amount of a deduction related to the decline in market value of a property caused by the damage or destruction, the income of the tax payer, and other factors. Federal and state tax laws could differ.
About Tips On MA Home Casualty Loss Tax Deductions
Always speak to financial consultant on deduction qualifications, calculating exact amounts, and adapting to federal and state amounts. This article provides tips on MA home casualty loss tax deductions and is intended to make you knowledgeable on potential deductions. It does not in any way imply that you can use deductions on your particular tax return.