Dealing with casualty losses from a federally declared disaster like Hurricane Ian can be complicated, especially when you have a mix of personal and rental properties and insurance claims are finalized in different years.
The year you deduct the loss depends on when you could reasonably determine the amount. This may have only been when the claim was actually finalized and not before. You may also be able to claim the loss in the year immediately preceding.
Residence Loss:
Because your claim was finalized in May 2024, your loss was sustained in the 2024 tax year. You will use Form 4684, Section A, to calculate the loss and then report it on Schedule A of your 2024 tax return.
Rental Property Losses:
For the rentals with claims finalized in 2023, report those losses on your 2023 tax return.
For the rentals with claims finalized in 2024, report those losses on your 2024 tax return.
For all rental property losses, you will use Form 4684, Section B, and then carry the result to your other rental property forms.
Important Note: The costs of repairs are an acceptable measure of the decrease in fair market value for both personal and rental property, as long as the repairs are actually made, are necessary to restore the property to its pre-disaster condition, are not excessive, and don't increase the property's value beyond its pre-casualty value.
TurboTax simplifies the process of reporting casualty losses by guiding you through a step-by-step interview. It's designed to fill out the correct IRS forms (Form 4684) for you based on your answers. Navigate to the Deductions & Credits tab and find the Casualty Loss section to begin.
So sorry for you losses and the unimaginable grief this has caused!
Hope this helps!
Cindy
**Please say "Thanks" by clicking the thumbs up icon in a post
***Mark the post that answers your question by clicking on the "Mark as Best Answer"
