Hurricane Ian prep

Forum|Forum|2 years ago
February 12, 2024
3 replies
43 views

On 2022 taxes we took a loss for our mobile home due to Ian. In 2023 we incurred demolition costs to prepare for the replacement. Is this deductible

MarilynG

Level 15

It appears that the cost of restoring the property to its original condition would be deductible as part of a Casualty Loss. You could go back and Amend your 2022 Return to include this amount in your original loss claim, or claim it on your 2023 return as additional expense related to prior loss.

"The cost of repairing damaged property isn’t part of a casualty loss. Neither is the cost of cleaning up after a casualty. But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions:

The repairs are actually made.
The repairs are necessary to bring the property back to its condition before the casualty.
The amount spent for repairs isn’t excessive.
The repairs take care of the damage only.
The value of the property after the repairs isn’t, due to the repairs, more than the value of the property before the casualty."

See the IRS Pub 547, Casualties, Disasters & Thefts for more detailed info.

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worrallernAuthor

Level 2

Still not sure where I can add additional expenses. Casualty form wants total loss which I did on 2022 tax. Just want to add demolition costs in my 2023 tax. Can it be done on schedule a? Thanks

JohnW152

Level 15

You can't claim these expenses as a deduction on Schedule A. As MarilynG1 points out above, cleanup expenses can only be used to reduce the fair market value (FMV) of your property.

According to Publication 551 (12/2022), Basis of Assets:

FMV is the price at which property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts.

See also Casualty Losses in the IRS's Topic no. 515, Casualty, disaster, and theft losses.

@worrallern