We have a pool enclosure that was damaged in a hurricane. How do I determine the cost basis for it when it was already there when we purchased the house?

[CarolC · Accepted solution]

You can determine the cost basis by researching the average cost of the enclosure and its life expectancy.  The product manufacturers usually provide the life expectancy of their product.  

For example:

Suppose the pool enclosure cost the previous owner $10,000 and the manufacturer gives their product a 20-year life expectancy.  Therefore, the value of the enclosure is reduced by $500 each year.  When you purchased your home, the enclosure was already 10 years old.  Your hurricane loss happened five years after you bought your home.  Therefore, the enclosure has only 5 years of useful life left.  The enclosure is now valued at $2,500.  This would be your loss.

With items like a pool enclosure, it will take a little research to determine your cost basis and loss.  You may be able to see if a local permit was pulled for the enclosure installation.  The permit may provide a value and a date of inspection.  If you are still unsure, a competent appraiser can help determine these values. 

Special rules apply to personal property losses as a result of a hurricane.  See this TurboTax FAQ What If I’ve Been Affected By a Natural Disaster for more information.