repairs after casualty loss

[rscottgadd]

How do I deduct for repairs after a casualty loss?

[DoninGA]

Repairs made to a personal residence, not used as a rental or in a business, are not deductible on a tax return.

A Casualty or Theft loss is not reported on a federal tax return unless the loss occurred in a federally declared disaster area.

[TomK2023]

When you have items that are lost or damaged as a direct result of a natural disaster, and you live in a federally declared disaster area, you may be able to take a tax deduction for the value of the property that's not covered by your insurance.

The lost or damaged items can be personal property, business property, or investment property.

Not eligible for the deduction:

• Property with progressive deterioration, such as termite or moth damage
• Stolen items
• Accidental losses of personal items, such as a ring dropped down the sink
• Property loss or damage of property for personal use or used in performing services as an employee that isn't the direct result of a natural disaster as described previously (this restriction started in 2018 and applies through 2025)

 

To enter a qualified casualty loss as a result of a natural disaster:

In TurboTax, jump to the entry area for casualty loss:

1. Open or continue your return.
2. Search for casualty loss and select the Jump to link in the search results.
3. Select Yes on the Did you have anything damaged or stolen in 2023? screen.
4. Answer the questions about your event, entering your Description in the following format: State, Disaster (for example, California, Wildfires).

When you complete the event and reach the Property Summary screen, you can enter any additional property losses by selecting Add a Property.

[rscottgadd]

Sorry, this is on a rental. 

[DoninGA]

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@rscottgadd wrote:

Sorry, this is on a rental. 

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Any repairs you make on a rental property are entered as an expense on Schedule E in the rental property section of the TurboTax program.

[rscottgadd]

The damage was done in 2021, clean-up and repairs were started the beginning of 2022 and were not finished until the end of 2023. I'm guessing I can spread out the repair cost on my taxes over those years? Also, I think I messed up on my 2022 taxes. I filled out a 4684 form, but I think I need to go back and amend it to leave out the 4684 form, and just do repairs. Also, the computer generated a 4797 form (sales of business property) with that even though I fixed it up but did not sell it. I think that is a mistake too. Would you agree?

[RobertB4444]

You can take the expenses in the years where you actually spent the money.  So the repairs you paid for in 22 would be on the 22 return, the repairs paid for in 23 on the 23 return.

You will probably get a better deduction for direct repairs than for a disaster loss.  So it may be worth going back and amending.  You definitely can't take both so if you did that then an amendment is a good idea.

You didn't sell the property so no sale should have been generated.  If the property shows as sold on the 23 return then you need to go back over the questions for the rental house and fix the answers.

@rscottgadd