After a declared flooding disaster - during which the basement flooded I spent money to clean it up but then added French drains in the basement to prevent the problem happening again. No problems since 🙂
Can I claim the cost of corrective and prevention work, if not done the FMV would have been reduced because of the risk of future flooding.
No, you can't include a property improvement as a casualty loss deduction.
Your casualty loss is the decrease in fair market value of the property caused by the casualty. This usually requires an appraisal to determine. The IRS allows you to use the cost of restoration as a fair estimate of the loss in value, as long as the property is restored to as-was condition. You made an improvement over and above the cost of restoring the property to as-was. The cost of the improvement is added to the cost basis of the property, and may reduce your capital gains when you sell, but the cost of the improvement is not included in the amount of your loss.
You can't claim the new drain. It was not part of the casualty. Please see this LINK for a more in-depth discussion.