Tax Question - hurricane loss?

**Eagle5US** · 02-15-2023, 17:53

For those smarter than me:

I understand that I can claim hurricane losses on taxes. I have read the literature on it but do not yet understand it.

Bought the house for $320K, Current MARKET value is $720K per the bank. Current CASH value on my affidavit of loss is $433K, and damage on the affidavit is $198K. Insurance reimbursement for damage $74K. (So many numbers

)

Instructions are to take the "Value of the home" before the damage, and subtract "what someone would pay for the home" after the damage but before it was fixed. Add the insurance settlement, then subtract $100. Whichever the smaller number should be used for the calculated loss. Ummm - what?

Which values do I use? Purchase minus $198K? Market minus $198K? Cash Value minus $198K? Are any of these values what I should use to determine "what someone would pay for the damaged home"? With the repairs came "upgrades" - another variable. Realizing I need to be consistent with one set of numbers - but the ratio of loss is SIGNIFICANTLY different between the three.

Any legit help would be appreciated.

Thanks-
Joe

Badger52 · 02-15-2023, 19:18

Quote:

Originally Posted by Eagle5US

Bought the house for $320K, Current MARKET value is $720K per the bank. Current CASH value on my affidavit of loss is $433K, and damage on the affidavit is $198K. Insurance reimbursement for damage $74K. (So many numbers

)

Instructions are to take the "Value of the home" before the damage (720K), and subtract "what someone would pay for the home" after the damage but before it was fixed (433K). Add the insurance settlement (74K), then subtract $100. Whichever the smaller number should be used for the calculated loss. Ummm - what?

I do my own long form taxes manually for years (although I have not lost a home). In the absence of any other information, if faced with what you describe - and I've seen worksheets way worse than this - my approach would be (728K-433K) = 295K. 73,900 is smaller. (It's also a rip, but if that's what they say...)

But, you have a lot of dinero involved here; I'd pay a reasonable piece of folding money to get a pro answer to that question. I'd really be interested to hear that answer.

And I wish you the best. Jeebers. The tax code is so hosed.

**Eagle5US** · 02-15-2023, 19:56

OMG - MIND BLOWN.

I didn't even CONSIDER that combination of numbers. As much as I hate it, I have to agree that paying someone may indeed be necessary.

I have done my own taxes (Long Form) for years as well - this is a new animal for me.

Thank You

Badger52 · 02-16-2023, 05:17

Quote:

Originally Posted by Eagle5US

I have done my own taxes (Long Form) for years as well - this is a new animal for me.

Thank You

Somewhere along the way we both finish, shake our heads, and mutter "theft...."

JJ_BPK · 02-16-2023, 08:55

Have not claimed hurricane damage in over 10 yrs and not at this price range, but when I did I think I took the damage amount minus the insurance reimbursement and wrote off the diff.

Damages for 4 different canes, all under 10K loss

Agree with the above,, get a pro in your area, one with FEMA & hurricane experience.

PS: Be careful, every time we had a big storm we had scammers going door to door that guaranteed they could get money for you, from FEMA and/or your insurance co.

These scammers cost some friends big bucks..

Penn · 02-16-2023, 23:05

I have sent the info to my tax attorney/accountant, idk, but he will supply the correct answer.