How to deduct my Hurricane Zeta home repairs, confusing (TIA :D)

[gr8tful1]

Many thanks in advance!  We live in federal declared major disaster area in MS (ZETA, 11/2020).  I'm hoping I can deduct the repair expenses to our primary residence.  I rented a big bucket lift & a chainsaw to remove a 14" broken-off live oak main branch that  broke off during the storm & stayed hung up in the tree.  I also paid a man to reinstall our privacy fence that blew down and I also bought him all the materials to do that.  Insurance would not pay for any of that (not covered/deductible too high).   The only "loss" we had were expenses for the fence repair & tree removal.  None of this seems to fit into the Casualties and Thefts section that I could see.  Greatly appreciate any guidance/advise.  Best wishes - gr8tful1  😄

[gloriah5200]

As part of tax reform relief for those affected by natural disasters, you can now deduct your total loss (minus $500 and any amount covered by insurance) along with your usual Standard Deduction, whether you amend 2019 (see below) or file as usual for tax year 2020. This means you’ll be able to claim everything you lost over $500 without having to itemize deductions on your taxes.

For additional information please refer to the following link:

Presidentially Declared Disaster Area

Here is a link to the information posted by IRS on Hurricane Zeta Disaster:

IRS announcement on Hurricane Zeta Relief

[gr8tful1]

Hi & thank you for the reply!  I am aware I can deduct these expenses; the question not "if", but "how"...?  How/where are these expenses input into TT specifically?  In my scenario, my "losses" are not property per se,(nothing was a total loss, thank God), but only the expenses to repair the damaged property. 

I hope that makes sense, thanks again - gr8tful1

[DMarkM1]

The expenses to repair the damage due to the Tropical Storm would be entered in the Casualty/Loss topic.  It is property loss or damage. 

Zeta was a tropical storm according to FEMA and doesn't qualify as a "Major Disaster".  You will be selecting "Federally declared disaster (not qualified) and the code is EM-3549.

Under the "Deductions & Credits" tab,

1. Scroll down to "Other Deductions..."
2. "Show More"
3. "Start/Revisit the "Casualty/loss" topic

[gr8tful1]

Hello DMark & thank you for the reply.  A couple of things please:

For one, I can assure you ZETA was not only a Hurricane but also a Federally -Declared Major Disaster:

Mississippi HURRICANE ZETA (DR-4576-MS)

Incident Period: October 28, 2020 - October 29, 2020

Major Disaster Declaration declared on December 31, 2020

Also, I did not explain properly, as my questions remain.  During the entry for each item subject to "loss", TT Deluxe keeps asking me about FMV for the tree & the fence, seemingly related to total loss for each... which is not the case.  I have no idea how to determine the FMV of the tree or the fence; they both came with the house.  That huge live oak is worth a boatload, but is not really applicable to a FMV analysis IMO, because it's a tree and it's still standing; but I did spend a chunk renting equipment to remove the limb that out-of-state opportunists kept want to charge me $5K to remove.  The fence also was not a total loss; six 4"x4" fence posts broke at the base and the rest were pushed over.  The fence sections were salvaged, but the posts had to be removed and reset, and then the fence reassembled.  

Doesn't seem like any of that is a "FMV" situation, involving depreciation, etc (but what do I know?).  I just want to claim my REPAIR expenses.  Many of my friends & neighbors had similar damage.  I hope to pass on a good answer to them, so I hope this helps clear things up....?  Thank you! 😄

[AmyC]

If it was all in good shape and you can prove it, I would claim the repairs as the cost basis.

Where: You need to go to the Casualty loss as described above. Enter the hurricane and date. Select personal property. Select Major Disaster, enter the disaster code, click continue. Description of property: Yard damage, continue filling in address, date acquired.

Why:

Cost basis: what you paid plus improvements. If you put up the fence, you have the entire price, easy to locate. The tree came with the house. A tree is critical for saving land in some areas. You may have had some plants blown away. Think in terms of an audit now. If you get audited, do you have pictures of the yard before the storm? A party outdoors, something that shows what was. Any pictures after the storm to show what happened? If you can prove what you had and lost, then repair expenses to bring it back to where it was, make a good story line. You have receipts to show the work done. You may actually have lost a little more than the receipts show. A beautiful tree losing a branch is not replaceable. A half dead limb lost, would not be worth anything. 

[gr8tful1]

Hi AmyC & many thanks for the unexpected reply!  I kinda thought this topic had died, since receiving 2 similar discouraging replies before yours.  In the meantime, I researched other legal/tax websites about claiming casualty losses - they seem to indicate all kinds of stipulations for our situation; summarizing:

You can deduct only the amount of all your casualty losses for the year that exceed 10% of your adjusted gross income for the year. This greatly limits or eliminates many casualty loss deductions. To add insult to injury, you must also subtract $100 from each casualty loss you suffered during the year. This reduction applies to each casualty loss.

The stipulation of the +10% of AGI, etc. seems very complicated, given my situation.  My mind  trends back to when I was self-employed; related expenses are  (or should be :D) fully deductible - without all these AGI complications.  But that may not be the case.  

Am I correct in thinking the primary issue is - casualty "loss" (unreimbursed) vs. casualty "repair expense" (money actually spent)?  And that by properly  classifying these repair expenses, I can claim them all?  Really don't want to get in any hot water over this; we spent about $1,500 and I did alot of the work myself.

If I knew how to enter this data into TT Deluxe, I would be able to see how it affects our return overall and then decide if we want to try and claim.  If claiming only increases our refund by a small amount, it won't be worth it...

So sorry long, many, many thanks!  Have a nice day 😄

[skripekr]

We sustained damage to our roof where the insurance company declared that entire roof needed to be replaced.  We have the insurance line item list where the deductible was greater than their loss estimate, no reimbursement.  We have had several estimates for replacement but have not had it replaced.  How would we claim it for TY2020?  My vehicle also sustained damage related to the night of the storm passing through.  Is that a separate line item for the Casualty Loss?

[DMarkM1]

You would claim the casualty loss for the roof and the vehicle on your 2020 tax return as one casualty event. 

You figure the loss for each item separately and then use the combined loss number on your return. 

To figure the loss for the personal residence you have some safe-harbor options that include either using the insurance estimate or the contractor estimates. 

The safe harbor methods for personal-use residential real property available through Revenue Procedure 2018-08 are the following.

• Estimated repair cost method.

• De minimis method.

• Insurance method.

• Federally declared disaster method—contractor safe harbor.

• Federally declared disaster method—disaster loan appraisal.

See page 7 of this IRS Publication for an explanation of each.  

[Nabbarrios]

Hi, 

Can safe harbor methods be used for Texas winter storm damages (also declared a major disaster), or is it only for hurricanes as TT suggests?

[DaveF1006]

It would be need to be classified as a federally declared major disaster to qualify for the Safe Harbor provision. For this, you will need a FEMA disaster code to report in your return. This can be found at the website of the Federal Emergency Management Agency (FEMA) found here.