New roof due to Hurricane Helene where insurance denied coverage and FEMA still pending

[MamaC1]

We were required to install a new roof out of our own pocket due to extensive leaks and roof paneling remaining saturated after hurricane Helene.  The insurance said they would not cover the loss as said was faulty installation even though 7 years old.  We obtained quotes and had roof replaced with one company.  I filed for FEMA assistance but are still pending a response.  Was told response may not come in time for me to meet the July extension filing deadline.  

If I can't estimate what FEMA may or may not reimburse, do I proceed with filing my 2024 taxes with the casualty loss valued at the exact cost to replace the roof?  Do I leave the expected reimbursement at zero since I have no good way to estimate?  If I end up with some reimbursement in 2025, do I then report that as income to the extent it reimbursed dollars expended?  

[Mike9241]

please consult IRS PUB 547 for casualty loss deduction 

also it would seem that you have the option to claim the loss on an amended 2023 return 

the pub also covers the situations where reimbursement is more or less than what was estimated

https://www.irs.gov/forms-pubs/about-publication-547 

there are various methods to figure your loss as described in the PUB for example

Repair costs for casualty loss on personal residence can be used as evidence of the decrease in value of the property if certain conditions are met 1). The estimated repair cost safe harbor method allows individuals to determine the decrease in the fair market value of their personal-use residential real property using the lesser of two repair estimates prepared by separate and independent licensed contractors 2)

1)Section 1.165-7 (a) (2) (ii) provides that the cost of repairs to the property damaged is acceptable as

evidence of the decrease in value of the property if the taxpayer shows that: (1) the repairs are necessary to restore the property to its condition immediately before the casualty; (2) the amount spent for such repairs is not excessive; (3) the repairs do not care for more than the damage suffered; and (4) the value of the property after the repairs does not, as a result of the repairs, exceed the value of the property immediately before the casualty.

2)The estimated repair cost safe harbor method allows you to figure the decrease in the FMV of your personal-use residential real property using the lesser of two repair estimates prepared by separate and independent licensed contractors. The estimates must detail the itemized costs to restore your property to its condition immediately before the casualty. The estimated repair cost safe harbor method is limited to casualty losses of $20,000 or less.

as you can see deducting a casualty loss can be complicated. you may want to consult a tax pro.

Don't really know if there was faulty installation. you would need a lawyer if you wanted to contest this finding. If there was, this could affect the FMV before the casualty which could affect the deduction for the loss.