Residential fire loss reporting requirement

[GP21]

Our house was destroyed by a fire in June 2019 due to an electrical problem.  We do not live in a federal disaster area.  The value of the house prior to the fire was $ 2.5 M; original cost was $ 1.4 M, followed by $ 400 K in improvements.  Cost of rebuilding the house (new design) is $ 3.5 M.  Loss of personal property in the house estimated at $ 7 M, before depreciation; however, insurance only covers $ 1.4 M.  This translates into a substantial loss to be determined by May 2021.  Recognizing the loss cannot benefit us through the current tax laws, is there a requirement to file Form 4684 (Casualties and Theft)?  If so, should it be filed with an amended 2019 tax return or with our 2020 tax return?  Thanks for your advice!

[Cynthiad66 · Accepted solution]

There is no need to prepare the form 4684 to capture the casualty loss.

In December 2017, Congress passed the largest tax reform bill in over 30 years. Included in the bill was the suspension (repeal) of several federal deductions for tax years 2018–2025.

The deduction for personal casualty or theft losses has been repealed in tax years 2018–2025, unless the loss occurred in a federally-declared disaster area.

Previously, uninsured losses exceeding $100 due to fire, theft, or natural disaster could be deducted if the total loss amount exceeded 10% of the AGI, regardless of location.

[GP21]

Thanks very much for your response.  I did not wish to waste my time.  Prior to the fire, I had been keeping track of home improvement  costs plus depreciation attributed to a home office.  I appreciate your taking the time to help!

[GP21]

Cynthis66...

   Hi!  Thanks very much for the excellent response to my question, which will prevent me from wasting my time completing a form that is not necessary for loss that cannot be recovered from a fire.  I appreciate your responsiveness and thorough response.  Thanks again!

GP21