dcsimg

Three Quick Tips for Claiming Property Damage As a Tax Deduction

By Andrew Freiburghouse on March 30th, 2010
Homeowners Insurance

If you've experienced significant damage to your property and your homeowners insurance does not cover the expenses, or only offers partial coverage, you may be able to claim a portion of your property damage as a tax deduction. However, the rules for claiming a tax deductible property loss are quite strict and complex.

Here are three tips for using property damage as a tax deduction:

1. Hire a Competent Tax Professional

IRS Form 4684, Casualties and Thefts, boasts a full 43 lines. When you add those lines to your regular 1040, and any other forms you may be using, confusion can set in pretty quickly.

In addition, your unreimbursed loss must exceed 10 percent of your Adjusted Gross Income.

To make a long story short, this may be a job for a tax pro.

2. Know Your Loopholes

9-11 and Hurricane Katrina made everyone think--including the IRS. The National Disaster Relief Act of 2008 formalized new regulations that give afflicted taxpayers more power to deduct losses for disaster areas designated by the federal government.

There are differences in deductibility depending on the type of hazard you experience. For example, the rules for those who had a water main break in Los Angeles, which was uncovered by home insurance, are different from the rules for those who had their whole city flooded and declared a disaster zone.

3. Better Homeowners Insurance Is Better than a Tax Deduction

Compare homeowners insurance quotes and policies to find a home insurance company that offers good coverage at an affordable price. Deducting property damage losses on your taxes should be a last ditch option. Homeowners insurance that prevents you from needing that kind of deduction is by far the better option.

Get Free Home Insurance Quotes
Enter Zip code :
Featured Insurance Quote
Twitter
Facebook 470 flares Google+
470 flares ×