You can deduct a casualty loss, but under the law, a personal casualty loss is determined by taking the smaller of:
- The cost or other basis of the property (reduced by any insurance reimbursement), or
- The decline in fair market value of the property as measured immediately before and after the casualty (reduced by any insurance reimbursement).
The cost of repairs may be used to measure the decline in fair market value, but you still have to calculate FMV before and after the event because TurboTax will ask for those two numbers. Be ready to do some math.
When the cost of repairs is determined to be a fair measure of the decline in fair market value, then all you have to do is take the fair market value before the casualty and reduce it by the cost of repairs to arrive at the fair market value after the casualty. .
Click on this link for more methods of determining your loss from the IRS FAQs for Disaster Victims - Casualty Loss (Valuations and Sections 165 (i))
Click here on this IRS link for more Tax Relief for Victims of Hurricane
Maria in Puerto Rico .
In TurboTax, jump to the entry
area for casualty loss:
- Enter casualty
loss in the TurboTax search box and press the Enter key.
- On the Stolen or Damaged Items screen, click Yes.
- Answer the
interview questions describing your event.
- When
finished at the Property Summary screen,
Enter any additional property losses by clicking the Add a Property button.
