The Loss of Casualty Losses
The new tax law eliminated the write off for any personal casualty losses. This involved uninsured losses from fire, theft, or sudden act of God such as an earthquake, tornado, flood or hurricane. The only exception is if it incurred in a presidentially declared disaster area. Thus, if your house is on fire and not part of a formally declared disaster area, you won’t be able to deduct any losses from that fire.
Moreover, even if you did qualify for the deduction, you would need to itemize to take the deduction. Finally, this personal deduction must be reduced by $100 and then by 10% of your adjusted gross income.
Bottom line: Update your insurance coverage on all of your property in order to avoid this problem. I should also note that there are some bills in Congress that, if passed, will allow a casualty loss deduction without having to itemize. If any of these bills pass, I will notify you in a post.
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