5/17/2012 - How property losses can affect taxes
With environmental disasters occurring throughout the year that can cause a considerable amount of financial distress, the Insurance Information Institute is reminding homeowners that the losses they experience may be tax deductible.
According to the III, if consumers own a residence and their property insurance did not entirely cover damage resulting from fire, flood or wind, a portion of the losses may be deducted from their federal tax return if the losses were significant.
For example, as a rule, the III says an unreimbursed loss can be deducted provided it is 10% of the homeowner's adjusted gross income, minus $100. This standard may not apply, however, if the property is used as a place of business.
To determine whether weather damage victims qualify, the III says the loss has to be documented. As a result, homeowners are urged to collect all receipts, statements and police reports that substantiate the loss. This paperwork should then be delivered to a tax professional.