Home damaged from Harvey $178,000 for repairs. We decided not to rebuild and in 2018 sold to an investor for 50% of cost basis. Do I have a casualty loss for 2017?

[danboe]

If we did not have out of pocket costs for repairs but chose to sell in 2018.Is it a casualty loss for tax return for 2017?

[SweetieJean]

If your property is covered by insurance, you must file a timely insurance claim for your loss. Otherwise, you can’t deduct the loss as a casualty or theft. Did you do so?

[ar4]

Actually I am not sure you need that. If you buy a property for 100 and sell it for 50, there is a loss of 50 right there anyway. No matter the cause.

[sbkohn]

You can't deduct a loss of 50 just "because". Assuming no insurance or claim filed, can they deduct the loss in value at sale time?

[Hal_Al · Accepted solution]

Yes, it's a casualty loss for 2017, the year of the event. The fact that you did not have an accurate measurement of your lost, until 2018, or were not "out of pocket",does not preclude you from claiming the loss on your 2017 return.

[TaxGuyBill]

A couple of other notes, just in case they were to apply to you:

The FMV of the property, and the Adjusted Basis are two items that factor into the Casualty Loss.  So your Casualty Loss may not necessarily be $178,000.

The Casualty Loss lowers your Basis, so keep that in mind when you report the sale.

[danboe]

Hey all , Thanks. I do have other adjustments to the loss, like clean up. demo and minor insurance payment. I am ware of the cost basis adjustment when I report the sale in 2018. There will not be a gain since the sale price and adjustments are far below  the  $500,000 exemption.