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Tax Deductions Based on Falling Home Value
In any natural disaster where there were extreme losses to nearby homes, a house's value can fall dramatically. Ultimately, this raises home owner's insurance and sets the stage where the value of the home is lowered because of the potential for future damage. It is important to understand tax structures in order to try to compensate for some of these losses.
Although the house was not damaged itself, it was in an area where there was severe damage. The house next door was completely destroyed. This has severely impacted the value of the home. Not only is the value impacted by the fact that there is potential for future damage, it is also impacted by the damage caused by neighboring properties. The look of damaged property and the future construction that will be needed around the home will ultimately continue to keep a lowered...
According to the research, "a casualty is the loss of property (including damage and destruction) because of a sudden event. The event must be identifiable, unexpected, and unusual" (Perez, 2013). The event of the mudslide would have to be a rare event in order to be able to claim a loss on taxes. Thus, it would be important to try to find out if there have been other, similar events in the recent past. If there have, and there is a pattern of such natural disasters in the area, it might be more difficult to claim lost value as a casualty loss. Thus, it will be important to help show that this was an unusual event in order to best secure the approval of a tax deduction for the amount of the loss.
The next step is to calculate how much…
References
IRS. (2014). Topic 515: Casualty, disaster, and theft losses. Tax Topics. Web. http://www.irs.gov/taxtopics/tc515.html
Perez, William. (2013). Casualty & theft losses. Tax Planning: U.S. Web. http://taxes.about.com/od/deductionscredits/qt/CasualtyTheft.htm
Turbo Tax. (2014). About casualty deduction for Federal Income Tax. Tax Deductions and Credits. Web. https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Deductions-and-Credits/About-Casualty-Deduction-for-Federal-Income-Tax/INF14772.html
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