Yes, FEMA assistance grants for loss or damage to property (real or personal) are considered an "other reimbursement"for purposes of a casualty loss.
While these grants are not considered taxable income, you cannot deduct casualty losses to the extent they are specifically reimbursed by these disaster relief grants. For purposes of Form 4684 - Casualties and Thefts, you should enter the amount of those grants as "Insurance or other reimbursement". Alternatively, you can reduce the value of the claimed casualty loss by the amount of the grant for that loss.
From FEMA letter Disaster
Relief Payments Are Not Subject to Federal Taxation:
”The IRS statements on the taxability of disaster grants instruct taxpayers not to “include post-disaster relief grants received under the disaster relief and emergency assistance act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants.”
