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New Member
posted Jun 3, 2019 11:20:52 AM

Can I deduct flood damage due to a sewer backup. After insurance claim, the $100 deduction and the 10% AGI deduction can I deduct the reminder.

I had 10,000 dollar from insurance and my total damage was 27000, AGI was 151,000

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1 Best answer
New Member
Jun 3, 2019 11:20:54 AM

Yes.

The main issue is how to value the damage. To determine the amount of a casualty or theft loss of personal–use property, you must know the fair market value of your property before and after the casualty. Fair market value is the price for which you could have sold the property to a willing buyer if neither of you had to sell or buy and both knew all relevant facts. The amount of your loss is the lesser of:

  • The decrease in fair market value as a result of the casualty; or

  • Your adjusted basis in the property before the casualty or theft

Please see IRS topic 507 for reference -http://www.irs.gov/taxtopics/tc507.html


You can not use the price to restore the property for this purposes, that is used by insurance companies and contractors in your situation. Evaluation of the damage is your responsibility, but IRS may come back and ask you to support your deductions. First, prepare the full list of lost and damaged items, add FMF before and after the damage and you will come to the total loss amount.

1 Replies
New Member
Jun 3, 2019 11:20:54 AM

Yes.

The main issue is how to value the damage. To determine the amount of a casualty or theft loss of personal–use property, you must know the fair market value of your property before and after the casualty. Fair market value is the price for which you could have sold the property to a willing buyer if neither of you had to sell or buy and both knew all relevant facts. The amount of your loss is the lesser of:

  • The decrease in fair market value as a result of the casualty; or

  • Your adjusted basis in the property before the casualty or theft

Please see IRS topic 507 for reference -http://www.irs.gov/taxtopics/tc507.html


You can not use the price to restore the property for this purposes, that is used by insurance companies and contractors in your situation. Evaluation of the damage is your responsibility, but IRS may come back and ask you to support your deductions. First, prepare the full list of lost and damaged items, add FMF before and after the damage and you will come to the total loss amount.