Casualty and Theft Losses
The new tax law suspends casualty and theft loss deductions for tax years 2018 through 2025, except for losses attributable to any to federally declared disaster.
For tax years ending before 2018, you could deduct as an itemized deduction any personal casualty or theft loss to the extent you weren’t compensated by insurance or otherwise if the loss exceeded $100 per casualty and the net total loss exceeded 10 percent of your adjusted gross income (AGI).
For disaster losses in a federally declared disaster area, you could elect to deduct the casualty loss in the tax year immediately preceding the tax year in which the disaster occurred. If you suffered a casualty loss because of Hurricane Harvey, Irma, or Maria, you should read the IRS resources listed below for special rules and relief.
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The new tax law provides that, for tax years 2018 through 2025, you can’t deduct your personal casualty or theft losses (not compensated by insurance or otherwise) unless it is a casualty loss attributable to a federally declared disaster. |
The loss must still exceed $100 per casualty and the net total loss must exceed 10 percent of your AGI. In addition, you can still elect to deduct the casualty loss in the tax year immediately preceding the tax year in which the disaster occurred.
How will this affect me?
Elijah and Charlotte own a home in Maryland which had $10,000 in damage to their siding due to a hail storm in March 2018. Their insurance paid $5,000 of the loss. The President never declared the storm a federal disaster. Therefore, they can’t deduct any of the $5,000 loss that wasn’t compensated by their insurance company.
Same as above, except the hail damage was part of a storm which the President declared a federal disaster. Elijah and Charlotte may be able to deduct the $5,000 loss that wasn’t compensated by insurance as an itemized deduction in 2017 or 2018 provided the $5,000 loss exceeds 10 percent of their AGI.