Our home had some water damage in 2024. The issue isn't fixed yet, we are still in negotiations with insurance. Is this something that can help with tax deductions?

[Jakemjohanson]

Water damage was caused by an appliance breaking in the middle of the night. Insurance has covered some expenses, but we have had to go out of pocket to cover full amounts for mitigation. We are still negotiating fair payout. We are putting off hiring a contractor until we have funds from the insurer to do so. If the damage can be used as a deductible, how can we go about doing so?

[MarilynG1]

Unfortunately, only a Federally-declared casualty can currently be claimed on your tax return.

The Federal Disaster Tax Relief Act of 2023 extended the special rules and return procedures for personal casualty losses attributable to certain major federal disasters declared between February 26, 2021, and February 10, 2025. 

Sub Publication 547 for details.

@Jakemjohanson 

[Edited 03/17/2025 | 9:06 am]

[xmasbaby0]

Sorry-----since the tax laws changed for 2018 to 2025, casualty losses cannot be deducted unless you are in a federally declared disaster area.   A leaking appliance is not going to qualify as a federally declared disaster loss.   If this was for your own home, you will not be able to enter anything about it on your tax return.  If it was for a rental property you own, that will be treated differently.