Can a homeowner deduct losses from a natural disaster?
The IRS allows no deduction for losses on the sale of your own home. There’s no way to use a loss to your advantage on your income tax return. It won’t matter what type of misfortune you may have run into, write Edith Lank and Miriam S. Geisman in Your Home as a Tax Shelter, Dearborn Financial Publishing, Chicago. If the house were rental property, on the other hand, your loss would be deductible, they say. However, casualty losses from fires, floods, earthquakes and other disasters are deductible from both state and federal income taxes. A casualty is the damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected or unusual, Lank and Geisman write. Causes range from earthquakes, tornadoes, floods and storms to vandalism and fires. In contrast to fire insurance, which often covers extensive replacement costs, Lank goes on to write, IRS deductions for casualty losses never can exceed fair market value before the casualty. Your loss of persona
