BERKELEY HEIGHTS, N.J. ( TheStreet) -- Homeowners who suffered losses from storms such as Hurricane Irene can potentially claim the losses on federal income tax return.The general rule is that casualty losses for your home, household items and vehicles are deductible for federal income tax purposes. An individual must file a timely claim with their insurance company, and in essence only the unrecovered loss after insurance proceeds and salvage value is tax deductible. The amount of loss for personal (nonbusiness use) property is the lower of the adjusted basis of the property or the decrease in fair market value of the property. (What is adjusted basis? For a home, it would be the purchase price plus any capital improvements made.)
|Hurricane Irene did damage along the Eastern Seaboard, but those hard hit can file for some tax relief.|
- A casualty loss does not have to be taken in the tax year it occurred.
- A casualty loss can still be used even if a taxpayer does not itemize by including it on standard deduction worksheet.
- For the tax years 2007-09 the 10% of AGI rule was waived; in the 2010 tax year, the 10% of AGI rule was in effect.
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