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mwfrederick55
New Member

Please help with questions about a casualty loss

We lost some personal property in the August 2016 flood that was not covered by insurance. It was an extension of our main house but because it was not attached, it was not covered. We have spent over 8K to get it almost back to condition before flood. (still have about 3K more to go, but will have to claim on next years taxes). Not exactly sure how or where to imput the 8K we have spent. It asks for FMV before and after the flood. Do we assume this answer to the best of our ability? Thanks for your help
1 Reply
DanielV01
Employee Tax Expert

Please help with questions about a casualty loss

It depends.  First, you may wish to see how the IRS calculates the loss, which you can read about in detail at the following link:  https://www.irs.gov/taxtopics/tc515.html.

The basic rule is this:  You claim as a loss the difference in the original value before the flood, and how much the same structure was worth after the flood.  You won't have to guess since you have exact estimates in this case.  You know what you spent to build the attachment.  This is the beginning FMV.  The casualty is the flood, and the loss is the amount it costs to return the structure to its original FMV.  In this case, the amount is 11,000 (or so).  Subtract this figure from the original value to arrive at the FMV after the flood.

You are allowed to claim this entire amount, subject to the limitations mentioned on the webpage cited above.  Even though you have not yet paid for all of the expenses, the deduction is based on the amount of loss, not on the amount paid to restore the property.

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