rental property and hurricane damage

[Konabella]

I am confused by how to handle my hurricane damage and insurance payout on a rental property that I have in Florida.  In 2022 hurricane Ian did about $28,000 in damage and the insurance provided a check for $20,000. All repairs were done before the end of 2022 except the roof payment which was 17,000 paid on 1/3/2023.  I know I can only deduct the actual losses of the $8000 but how do I split it between the roof paid in 2023 and all the other expenses paid in 2022? 

[RobertB4444]

You put it all on 2023.  You need the 17K in roofing expenses to qualify the $8K in deductions so you'll have to wait until next year to take it.

@Konabella 

[Konabella]

So I can wait until next year to take ALL of the expenses for repair due to the hurricane damage? Even the drywall, fence, tree removal and other repairs that I paid in 2022? 

I rent the home for 3 months only through the year. Should I claim enough expenses for repair to offset the income that I get for rental as it would easily cover it? I guess I am asking if I can pick and choose what I claim due to hurricane or does it all need to be claimed on the same year? 

Thank you for your response!

[AmyC]

The IRS allows taxpayers to go back a year to claim expenses. You could put all of it on the 2022 return. See Disaster Assistance and Emergency Relief for Individuals and Businesses.

Claiming repairs means normal stuff, generally. See 2022 Instructions for Schedule E (2022) You will want to claim the disaster related loss. See Publication 547 (2022), Casualties, Disasters, and Thefts.

I think the smart bet would be to claim it all together on 2022 as a disaster loss. It is your tax return which means ultimately you decide where you want to put expenses and which year. You could file an amended 2021 to claim the 2022 expenses. If you had a higher income, amending might be better for you.

[Konabella]

I will look into those forms. I have been reading on the IRS website that if I have loss in a Federal Disaster area that I can add that loss on top of the standard deduction if I don't I don't itemize. I have an $8000 loss after the insurance was paid out. Can I add it to the the standard deduction? Also, I am in Michigan and this is a second home in Florida. Second homes were not eligible to FEMA assistance during the clean up. Are second homes eligible for disaster area loss deduction? I appreciate your help. I looked around my area for tax help and they were not familiar with Federal disaster area tax laws because it doesn't happen around my home town.

[Cynthiad66]

I am sorry for about the IAN Disaster.  For Casualties, Disasters and Thefts refer to Publication 547, and Publication 551, Basis of Assets. Individuals are required to claim their casualty and theft losses as an itemized deduction on Form 1040, Schedule A .

Only homeowners occupying a home as a primary residence at the time of the disaster are eligible for FEMA awards. FEMA cannot offer them for repair of second homes.

You can claim a disaster loss in one of two ways. At this point you You may claim the disaster loss for the 2022 tax year when you  file, or you may claim the loss against 2021 income by amending. 

You can use TurboTax to amend your tax return on Form 1040X, writing “Disaster” in red at the top of the tax return and the name of your city, county or state that was declared a disaster area.

How to enter your qualified casualty loss

1. Open or continue your return in TurboTax.
2. Search for casualty loss and then click the Jump to link in the search results.
3. On the Casualties and Thefts screen, select Yes to the question Do you want to work on your 2022 casualties and thefts now?

I hope this helps.  If you need additional assistance, please return to the forum.