It depends. Yes, you can take a deduction for damages due to a natural disaster that has been declared a federal disaster. This is quite an important distinction. You can deduct personal losses that are not reimbursed by insurance.
Your loss is equal to the smaller of the damaged property’s adjusted tax basis or decline in value, less any insurance proceeds you received or expect to receive. You must itemize to deduct non-business (personal) losses. You have to add two offsets to this deduction. The calculated loss is first reduced by $100, then the balance is deductible only to the extent it exceeds 10% of your adjusted gross income (AGI).
2024 disaster losses can be claimed on your 2023 or 2024 tax return. This is because individuals can opt to take the loss on the return for the year of disaster or the return for the preceding year. If you have already filed your 2023 tax return, then you can deduct the 2024 losses for 2023 by filing an amended 2023 tax return.
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