You will report the total value of your Personal Property hurricane loss. To qualify for the special hurricane loss rules, you must live in a federally declared disaster area. If you do not live in an official disaster area, you may still claim the loss. However, different rules will apply.
FMV means what the item is worth in the general marketplace. A competent appraiser can determine the value of your loss. You will use the smaller of the property’s tax basis or the decrease in fair market value to determine your loss.
The IRS states, "You figure the amount of your loss using the following steps:
- Determine your adjusted basis in the property before the casualty. For property you buy, your basis is usually its cost to you. For property you acquire in some other way, such as inheriting it or getting it as a gift, you must figure your basis in another way. For more see Publication 551, Basis of Assets.
- Determine the decrease in fair market value, or FMV, of the property as a result of the casualty. FMV is the price for which you could sell your property to a willing buyer. The decrease in FMV is the difference between the property's FMV immediately before and immediately after the casualty.”
