I am in a similar situation. I successfully deducted the loss of Fair Market Value due to hurricane Ian in 2022 based on before and after appraisals.
I subsequently paid an unlicensed contractor (who claimed to be licensed) more then $23,000 to rehab the house. He did not finish any of the tasks he claimed to have finished (most were never started). Nor did he even purchase the materials he charged me for. He promised to pay me back, but never did, and later declared bankruptcy. He has been arrested and charged with grand theft and fraud. There is a ton of evidence (including photos and a phone call recorded with his permission) that he intended to cheat me.
After scouring the internet, I found many articles stating that contractor fraud is not deductible *except when related to a federally declared major disaster* but none of them explain how to claim it on a tax return if it *is* disaster-related.
I can deduct the amount as a non-business bad debt, but that deduction if fairly trivial compared to deducting the full value as casualty loss.
The casualty loss form for theft (which this clearly is) wants me to describe the type property that was stolen, so I'm not sure how to do that.
Any advice appreciated.
